Iron ore futures gained on Monday, reversing earlier losses as supply concerns in Australia offset the weak outlook for steel demand and Chinese mill profitability.
Iron ore prices found support after workers at BHP’s Port Hedland Bulk Export Terminal announced industrial action following the breakdown of mediation talks with the company. BHP exports around 290 mln tons of iron ore annually through Port Hedland, accounting for nearly half of the port’s total cargo throughput, raising concerns over potential disruptions at the world’s largest iron ore export hub.
Additional support came from reports that China Mineral Resources Group (CMRG) has restricted several steel mills from taking delivery of lower-grade Fortescue cargoes, tightening the availability of certain iron ore grades at Chinese ports.
Broader commodity sentiment was also supported by stronger-than-expected Chinese trade data for June and the approval of the country’s 15th Five-Year Plan aimed at boosting domestic consumption, although analysts said the measures are unlikely to materially improve steel demand in the near term.
Despite the rebound, market fundamentals remain bearish. Chinese steel mills continue to face pressure from sluggish steel demand, high coking coal costs and weak finished steel prices, squeezing profit margins.
On the supply side, persistently high portside inventories in China and the expected ramp-up of new low-cost supply, including the Simandou iron ore project in West Africa, are expected to keep pressure on the market over the medium term.
Reflecting the cautious market outlook, major Chinese steelmaker Shagang kept its long steel prices unchanged for July 11-20 sales, signaling continued caution over downstream demand.
On the Dalian Commodity Exchange, the most-traded September iron ore contract rose 1.81pct to 760.5 yuan (USD 112.2) per ton. Coking coal futures gained 1.20pct to 1,260 yuan (USD 186) per ton, while coke futures fell 0.69pct to 1,868 yuan (USD 276) per ton.
On the Shanghai Futures Exchange, rebar futures increased 0.75pct to 3,090 yuan (USD 456) per ton, HRC futures rose 0.67pct to 3,302 yuan (USD 487) per ton. Wire rod futures edged up 0.09pct to 3,319 yuan (USD 490) per ton, while stainless steel futures advanced 1.71pct to 14,555 yuan (USD 2,148) per ton.
1 USD / 6.77 yuan
| Item | Closing Price (in yuan) | Difference from Night Session (pct) | Difference from Previous Morning Session (pct) |
|---|---|---|---|
| Wire Rod | 3,319.00 | ▲ 0.09 | ▲ 0.30 |
| Hot Rolled Coils | 3,302.00 | ▲ 0.67 | ▲ 0.91 |
| Rebar | 3,090.00 | ▲ 0.75 | ▲ 1.17 |
| Stainless Steel | 14,555.00 | ▲ 1.71 | ▲ 2.03 |
| Iron ore | 760.50 | ▲ 1.81 | ▲ 2.10 |
| Coke | 1,868.00 | ▼ -0.69 | ▲ 0.16 |
| Coking Coal | 1,260.00 | ▲ 1.20 | ▲ 1.67 |
