Iron ore retreats as markets weigh holiday restocking against structural risks

Iron ore futures declined on Friday, pressured by persistent concerns over long-term demand, even as near-term buying interest remained solid.

The iron ore and steel markets faced headwinds throughout the week due to escalating China-U.S. trade tensions and a growing wave of protectionist measures targeting Chinese steel products. Most recently, India imposed a 12pct safeguard tariff on flat steel imports. China was India’s second-largest steel supplier by volume in FY25, which ended on March 31, 2025.

The outlook for iron ore demand remains uncertain, with inventories at major Chinese ports rising on a weekly basis. Additionally, worries about a slowdown in seasonal steel demand, coupled with increasing steel output, have raised fears of oversupply, which could further pressure prices.

Despite the overall drop in futures, near-term demand remains strong ahead of the upcoming Labour Day holidays from May 1 to May 5, 2025. Pre-holiday restocking activity has supported buying interest and helped limit the downside in the short term.

On the Dalian Commodity Exchange, the most-active September iron ore contract fell by 1.87pct to 709 yuan (USD 97.2) per ton. However, it still recorded a 1.43pct gain compared to the closing of the morning session last Friday. Coke futures declined by 1.29pct to 1,566 yuan (USD 215), while coking coal futures were nearly unchanged, ending the morning session at 956 yuan (USD 131) per ton.

Meanwhile, on the Shanghai Futures Exchange, rebar futures dropped by 0.48pct to 3,101 yuan (USD 425) per ton. HRC futures slipped 0.31pct to 3,204 yuan (USD 439) per ton. Wire rod futures declined by 1.17pct to 3,290 yuan (USD 451) per ton, and stainless steel futures eased by 0.59pct to 12,680 yuan (USD 1,739) per ton.

1 USD / 7.29 yuan