Iron ore futures rise, coking coal plunges on supply outlook

China’s iron ore futures moved higher on Friday, but the wider ferrous complex came under pressure as coking coal and coke prices fell sharply following renewed expectations of improved coal supply. Weak steel demand and deteriorating mill profitability continued to weigh on the market.

The sharp decline in coking coal came after Chinese authorities called for stable coal production and supply, easing concerns over earlier supply constraints. Market insiders said the measures have shifted sentiment quickly, with expectations of supply normalization putting significant pressure on both coking coal and coke.

The weakness in coal is also eroding raw material cost support for steelmakers. With steel mill margins already deeply compressed, mills are becoming increasingly resistant to high input costs, while some producers are reducing output or planning blast furnace maintenance.

Iron ore has been more resilient as some mills continue to replenish inventories ahead of the upcoming holidays. However, market insiders said the restocking is largely seasonal, while underlying steel demand remains weak. High port-side iron ore inventories and rising global supply remain key headwinds for the long-term outlook.

Chinese steel traders described the steel market as softer following the US Federal Reserve’s rate decision, although the direct impact on domestic steel was considered limited. Steel prices have adjusted less than raw materials, while export activity remains quiet.

On the Dalian Commodity Exchange, the most-traded iron ore contract rose 0.70 pct to 715.5 yuan (USD 106.7) per ton. Coking coal plunged 7.78 pct to 1,487 yuan (USD 222), while coke fell 5.45 pct to 1,952.5 yuan (USD 291) per ton.

On the Shanghai Futures Exchange, HRC futures fell 1.11 pct to 3,290 yuan (USD 491) per ton, while rebar declined 1.02 pct to 3,096 yuan (USD 462) per ton. Wire rod futures fell 0.20 pct to 3,426 yuan (USD 511) per ton, while stainless steel rose 0.92 pct to 13,695 yuan (USD 2,042) per ton.

1 USD / 6.70 yuan