Iron ore futures consolidate as cooler sentiment offsets cost support

China’s iron ore futures remained broadly stable on Tuesday as firmer raw material costs and expectations of seasonal demand were offset by cooler market sentiment.

Market sentiment softened after the recent rally, with Chinese traders reporting some easing in steel prices and a more cautious approach among buyers.

Near-term supply remained supportive, as recent typhoon disruptions reduced iron ore port arrivals and tightened short-term availability. On the demand side, steel mills are expected to increase production in September in anticipation of improved seasonal demand during September-October, although the recovery is likely to be limited as high coke prices continue to squeeze mill margins.

Cost pressures remained a key support for the ferrous complex. Coking coal supply continues to be constrained by safety inspections, while coke producers face rising costs and tight supply conditions. Higher crude oil prices are also keeping seaborne freight costs elevated, providing additional support to imported iron ore.

Chinese steel traders said the market is currently being supported more by higher raw material costs and seasonal expectations than by a fundamental improvement in steel demand.

On the Dalian Commodity Exchange, the most-traded iron ore contract was up 0.14pct from the previous night session at 726.5 yuan (USD 108) per ton. Coke futures declined 0.27pct to 2,202 yuan (USD 328) per ton, while coking coal futures fell 0.12pct to 1,694 yuan (USD 252) per ton.

On the Shanghai Futures Exchange, HRC futures declined 0.29pct to 3,388 yuan (USD 504) per ton, while rebar futures fell 0.38pct to 3,174 yuan (USD 472) per ton. Wire rod futures decreased 0.73pct to 3,402 yuan (USD 506) per ton, while stainless steel futures declined 1pct to 13,825 yuan (USD 2,057) per ton.

1 USD / 6.72 yuan