Iron ore gains ground despite lingering concerns over steel demand

Iron ore futures inched higher on Wednesday, though market sentiment remained subdued due to a cautious demand outlook.

Near-term demand provided some support, as stable profitability encouraged steel mills to maintain elevated production levels, thereby sustaining iron ore consumption. However, concerns over the long-term outlook persist. Potential steel production curbs, expectations of weaker seasonal demand during the summer, and rising protectionist measures targeting Chinese steel exports could weigh heavily on iron ore demand in the second half of the year.

Adding to market unease, Beijing’s continued reluctance to roll out major stimulus measures is casting a shadow over the steel sector’s prospects. Recent moves by the Chinese central bank to cut both the one-year and five-year loan prime rates did little to lift sentiment. Ongoing weakness in the property sector, traditionally a key driver of steel consumption, continues to dampen investor confidence.

On the Dalian Commodity Exchange, the most active September iron ore contract rose by 0.76pct to 728.5 yuan (approximately USD 100.9) per ton. In contrast, coke and coking coal futures saw modest declines, falling 0.14pct to 1,417.5 yuan (USD 196) and 0.36pct to 842 yuan (USD 117) per ton, respectively.

Meanwhile, steel prices on the Shanghai Futures Exchange remained largely range-bound. Rebar futures held steady at 3,061 yuan (USD 424), while HRC futures edged down 0.16pct to 3,211 yuan (USD 445). Wire rod prices slipped 0.15pct to 3,341 yuan (USD 463), and stainless steel dipped 0.08pct to 12,870 yuan (USD 1,783) per ton.

1 USD / 7.21 yuan