Iron ore futures edge as demand concerns weigh on market

Iron ore futures slipped on Friday as traders remained cautious over weak demand prospects and the absence of significant stimulus measures from Beijing.

Market sentiment had already been weighed down earlier in the week by the lack of concrete policy announcements following a key government meeting last month. Heavy rainfall in several Chinese regions further pressured the steel sector by disrupting construction activity, compounding the slowdown in downstream demand.

In the short term, some factors may provide limited support to iron ore prices, including a weekly drop in China’s port inventories and continued high output from blast furnace-based steel mills benefiting from healthy profit margins.

However, the longer-term outlook remains bearish due to potential production cuts aimed at curbing excess steel capacity, ongoing challenges in the property sector, once a major steel consumer, and rising trade protection measures against Chinese steel products.

Despite weaker demand caused by weather-related disruptions, leading Chinese steelmaker Shagang raised domestic long steel prices by USD 28 per ton for sales from August 1-10.

On the Dalian Commodity Exchange, the most-traded September iron ore contract edged down 0.19pct to 783 yuan (USD 108.8) per ton, extending losses to 2.4pct compared with last Friday’s morning close.

Coking coal tumbled nearly 9pct to 985 yuan (USD 137), while coke declined 3pct to 1,585 yuan (USD 220) per ton.

On the Shanghai Futures Exchange, rebar futures dropped 1.23pct to 3,203 yuan (USD 445), HRC slipped 0.58pct to 3,401 yuan (USD 473), wire rod eased 0.55pct to 3,432 yuan (USD 477), and stainless steel was nearly flat at 12,840 yuan (USD 1,786) per ton.

1 USD / 7.19 yuan