Iron ore futures edge higher as market sentiment improves

China’s iron ore futures edged higher on Wednesday as improving market sentiment, expectations for steel production cuts and possible policy support offset continued concerns over weak steel demand and mill profitability.

Market insiders said sentiment improved after CISA proposed industry action to reduce steel capacity and inventories, while some mills are already planning output cuts and carrying out maintenance ahead of October. Slightly better demand and firmer steel prices have also reduced some of the negative pressure on raw materials.

CISA member mills’ daily crude steel output rose 2 pct to 1.92 mln tons per day during September 1-10, but remained 7.8 pct lower YoY.

Some steel mills have started pre-holiday iron ore restocking, providing support for prices. With two major holidays approaching, market participants expect demand to be tested through early October.

On the Dalian Commodity Exchange, the most-traded iron ore contract increased 0.14pct to 709 yuan (USD 105.6) per ton. Coking coal declined 0.06pct to 1,616 yuan (USD 241), while coke fell 0.51pct to 2,062 yuan (USD 307) per ton.

On the Shanghai Futures Exchange, HRC futures rose 0.36pct to 3,323 yuan (USD 495) per ton, while rebar increased 0.74pct to 3,126 yuan (USD 466) per ton. Wire rod futures rose 0.29pct to 3,425 yuan (USD 510) per ton, while stainless steel futures edged down 0.04pct to 13,540 yuan (USD 2,018) per ton.

1 USD / 6.70 yuan