Iron ore futures climb on firm near-term fundamentals and stimulus hopes

Iron ore futures rose on Friday, supported by firm near-term fundamentals and expectations of upcoming policy support from Beijing.

Healthy profit margins have prompted blast furnace-based steel mills to boost production, while low port-side iron ore inventories and reduced finished steel stockpiles in key Chinese warehouses continue to underpin prices.

Market sentiment was also lifted by the anticipated outcome of a key policy meeting later this month, where additional stimulus measures are expected. Beijing’s renewed commitment to supply-side reforms, aimed at curbing aggressive price competition in core sectors, further improved the outlook for the steel industry.

Despite the recent gains, some analysts caution that the rally may be short-lived. They note that sentiment, rather than fundamentals, is driving the rebound, particularly as the troubled property sector, once a major consumer of steel, continues to weigh on demand.

Over the longer term, the iron ore market faces significant headwinds. These include a weaker outlook for Chinese steel exports due to rising protectionist trade measures and the risk of renewed steel output curbs by Chinese authorities.

On the Dalian Commodity Exchange, the most-traded September iron ore contract rose 0.38pct to 785 yuan (USD 109.3) per ton, recording a weekly gain of 3.66pct. Coking coal and coke futures also rose, settling at 1,518 yuan (USD 211) and 926 yuan (USD 129) per ton, up 1.23pct and 2.55pct, respectively.

Meanwhile, steel futures advanced on the Shanghai Futures Exchange. Rebar increased by 0.74pct to 3,147 yuan (USD 438) per ton, HRC gained 0.91pct to 3,310 yuan (USD 461), wire rod climbed 1.18pct to 3,417 yuan (USD 476), and stainless steel edged up 0.39pct to 12,725 yuan (USD 1,772) per ton.

1 USD / 7.18 yuan