Iron ore futures slip as market faces seasonal headwinds

Iron ore futures fell on Wednesday, pressured by weak demand due to a seasonal slowdown in steel consumption.

The summer lull has led several steel producers to scale back output, with China’s crude steel production dropping 6.9pct YoY to 86.55 mln tons in May, according to data from the National Bureau of Statistics (NBS).

Despite the seasonal dip, lower raw material costs have helped many steel mills maintain profitability and sustain higher production levels. The China Iron and Steel Association (CISA) reported that its member mills, mostly large and mid-sized producers, produced 2.159 mln tons of steel in the first ten days of June, up 3.2pct from the previous ten-day period. However, this still marks a nearly 4pct YoY decline.

Rising iron ore inventories at major Chinese ports also added to the downward pressure on futures prices.

Long-term demand for iron ore remains under pressure due to persistent weakness in China’s property sector and escalating global trade tensions. Concerns have been further amplified by rising geopolitical risks in the Middle East, which could disrupt global trade and dampen steel demand further.

Insiders noted that the steel market remains sluggish both domestically and internationally, with no clear short-term catalyst for recovery.

On the Dalian Commodity Exchange, the most-traded September iron ore contract fell 0.5pct to 695.5 yuan (USD 96.8) per ton. Coke futures rose 0.62pct to 1,375 yuan (USD 191), while coking coal slipped 0.57pct to 790.5 yuan (USD 110) per ton.

Meanwhile, on the Shanghai Futures Exchange, rebar futures edged up 0.13pct to 2,986 yuan (USD 416) per ton and HRC futures rose 0.32pct to 3,102 yuan (USD 432) per ton. Wire rod gained 0.43pct to 3,303 yuan (USD 460) a ton. Stainless steel futures inched up 0.12pct to 12,525 yuan (USD 1,744) a ton.

1 USD / 7.18 yuan