Iron ore futures extended losses on Thursday as concerns over weakening steel demand and pressure on Chinese steel mill margins continued to weigh on market sentiment.
Market insiders noted that steelmakers are facing higher production costs following the recent surge in coking coal prices. Coking coal has rallied in recent sessions after a fatal mining accident in Shanxi, China’s largest coal-producing region, prompted authorities to tighten safety inspections, raising concerns over supply availability.
At the same time, seasonal weakness in steel demand is adding pressure to finished steel prices. While steel output remains relatively high, demand has slowed amid the summer season, with rising temperatures and heavy rainfall affecting construction activity in several regions of China.
Chinese steel traders reported that flat steel demand remains relatively stable, while long steel sales have weakened, reflecting slower activity in the construction sector.
The combination of weaker steel prices and higher raw material costs is squeezing mill profitability, potentially leading to production cuts and lower iron ore consumption. High port-side iron ore inventories also remain a key bearish factor for the market.
On the Dalian Commodity Exchange, the most-traded September iron ore contract fell 1.85pct to 767.5 yuan (USD 113.3) per ton. Coking coal and coke futures extended gains, rising 4.34pct and 2.28pct to 1,431.5 yuan (USD 211) per ton and 2,043 yuan (USD 302) per ton, respectively.
On the Shanghai Futures Exchange, rebar futures declined 0.57pct to 3,157 yuan (USD 466) per ton, while HRC futures fell 0.44pct to 3,377 yuan (USD 499) per ton. Wire rod futures dropped 0.56pct to 3,348 yuan (USD 494) per ton, and stainless steel futures decreased 2.42pct to 14,710 yuan (USD 2,172) 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 | 3,348.00 | ▼ -0.56 | ▼ -0.39 |
| Hot Rolled Coils | 3,377.00 | ▼ -0.44 | ▼ -0.27 |
| Rebar | 3,157.00 | ▼ -0.57 | ▼ -0.38 |
| Stainless Steel | 14,710.00 | ▼ -2.42 | ▼ -2.14 |
| Iron ore | 767.50 | ▼ -1.85 | ▼ -1.63 |
| Coke | 2,043.00 | ▲ 2.28 | ▲ 2.10 |
| Coking Coal | 1,431.50 | ▲ 4.34 | ▲ 3.49 |