Iron ore rises as near-term support offsets supply concerns

Iron ore futures edged higher on Friday after reversing earlier losses, supported by resilient Chinese steel output, although the medium-term outlook remained bearish.

Data from the China Iron and Steel Association (CISA) showed crude steel output among its member mills increased 0.8pct in mid-June from the first 10 days of the month to 2.1 mln tons per day, indicating mills continued to maintain relatively high production levels despite the seasonal slowdown in steel demand. However, output remained 2.2pct lower than the same period last year.

Iron ore prices came under pressure earlier in the session amid persistent concerns over rising global supply, elevated inventories at Chinese ports and seasonally weaker steel demand. However, futures recovered in afternoon trading as investors covered short positions ahead of the weekend, lending temporary support to prices.

Despite Friday’s gains, market participants expect the recovery to be short-lived. The medium-term outlook remains bearish as seasonal weakness in Chinese steel demand, rising global iron ore supply and growing protectionist measures against Chinese steel exports are expected to continue weighing on iron ore demand.

On the Dalian Commodity Exchange, the most-traded September iron ore contract rose 0.81pct to 748 yuan (USD 109.9) per ton, posting a marginal 0.13pct gain compared with the closing of the last morning session of the previous week.

Coking coal futures edged up 0.12pct to 1,248.5 yuan (USD 184) per ton, while coke futures slipped 0.15pct to 1,946 yuan (USD 286) per ton.

On the Shanghai Futures Exchange, rebar futures declined 0.39pct to 3,093 yuan (USD 455) per ton, while HRC futures edged lower to 3,316 yuan (USD 487) per ton. Wire rod futures fell 0.69pct to 3,322 yuan (USD 488) per ton, while stainless steel futures edged higher to 14,630 yuan (USD 2,151) per ton.

1 USD / 6.8 yuan