Iron ore rises on steady steel output despite demand concerns

Iron ore futures advanced on Monday, supported by resilient Chinese steel production despite continued concerns over weak steel demand and rising global supply.

Although iron ore continues to face supply-side pressure from high port inventories in China and increasing shipments from major global miners, relatively high crude steel production has continued to support near-term raw material consumption.

However, gains remained limited as Chinese steel mills continued to face shrinking margins amid declining steel prices and broader weakness in steel demand. Market insiders said current production levels could become difficult to sustain unless steel demand improves, despite higher coking coal prices providing some cost support.

Traders reported little change in domestic market conditions, with finished steel inventories gradually increasing as demand remained subdued in both the domestic and export markets. Chinese steel exports are also coming under increasing pressure from growing protectionist measures in key overseas markets.

On the Dalian Commodity Exchange, the most-traded September iron ore contract rose 0.67pct to 746 yuan (USD 109.7) per ton. Coking coal and coke futures increased 4.19pct and 2.45pct to 1,294.5 yuan (USD 190) per ton and 1,982.5 yuan (USD 292) per ton, respectively.

On the Shanghai Futures Exchange, rebar futures edged up to 3,095 yuan (USD 455) per ton, while HRC futures rose 0.21pct to 3,319 yuan (USD 488) per ton. Wire rod futures gained 0.45pct to 3,369 yuan (USD 496) per ton, while stainless steel futures advanced 0.48pct to 14,770 yuan (USD 2,173) per ton.

1 USD / 6.79 yuan