Iron ore futures climb but outlook mixed

Iron ore futures extended gains on Thursday, supported by short-term supply constraints and firm steel production.

A decline in iron ore inventories at major Chinese ports and improved profit margins has encouraged blast furnace-based mills to maintain high production levels, despite an overall slowdown in steel output.

According to analysts, reduced shipments from key exporters Australia and Brazil have also provided support to prices.

In recent weeks, Chinese authorities have voiced concerns over aggressive price wars in sectors such as steel and automotive, which have contributed to deflationary pressure in the economy. Policymakers are now targeting this so-called “involution”, a term referring to intense, often counterproductive competition. In theory, curbing such behavior could stabilize steel prices, indirectly supporting iron ore demand.

However, the seasonal slowdown in construction activity, particularly affecting long steel products, along with possible steel output restrictions from Beijing, continues to weigh on the demand outlook. Additionally, recent regulatory scrutiny over billet exports, which have risen sharply this year, may further limit iron ore consumption.

On the Dalian Commodity Exchange, the most-traded September iron ore contract rose 1.81pct to 785.5 yuan (USD 109.4) per ton. Coking coal and coke futures gained 1pct and 1.55pct, settling at 1,519 yuan (USD 212) and 918.5 yuan (USD 128) per ton, respectively.

Meanwhile, on the Shanghai Futures Exchange, rebar increased by 0.8pct to 3,133 yuan (USD 437) per ton. HRC futures rose 1.23pct to 3,292 yuan (USD 459), wire rod climbed 0.86pct to 3,386 yuan (USD 472), and stainless steel edged up 0.32pct to 12,730 yuan (USD 1,774) per ton.

1 USD / 7.17 yuan