Iron ore futures ease as supply pressure weighs on market

China’s iron ore futures declined on Tuesday as ample supply and rising port inventories weighed on sentiment, although pre-holiday restocking by steel mills and high freight costs continued to provide support.

Chinese steel mills are still replenishing iron ore inventories ahead of the October 1-7 holiday, while relatively firm steel production is supporting near-term demand. However, weak mill profitability has limited the pace of restocking, with mills remaining cautious about building inventories aggressively.

Market insiders said global iron ore supply remains high and port inventories are expected to rise further. At the same time, high freight costs are providing a floor for seaborne iron ore prices. Overall, the market remains caught between near-term support from restocking and freight costs and pressure from high supply and weak steel mill margins.

Chinese steel traders reported relatively active steel buying activity in the local market and firmer prices in some regions, while export activity also remained relatively positive. However, steel mills continue to face margin pressure and are seeking to maintain export volumes to support sales.

On the Dalian Commodity Exchange, the most-traded iron ore contract fell 1.05 pct to 708 yuan (USD 105.7) per ton. Coking coal rose 0.23 pct to 1,518.5 yuan (USD 227) per ton, while coke increased 0.46 pct to 1,984 yuan (USD 296) per ton.

On the Shanghai Futures Exchange, HRC futures fell 0.18 pct to 3,299 yuan (USD 492) per ton, while rebar rose 0.19 pct to 3,114 yuan (USD 465) per ton. Wire rod declined 0.70 pct to 3,409 yuan (USD 509) per ton, while stainless steel increased 0.29 pct to 13,745 yuan (USD 2,052) per ton.

1 USD / 6.69 yuan