Iron Ore Slips on Steel Mill Losses

Iron ore futures fell back below CNY 750 per ton, paring recent gains as mounting losses at Chinese steel mills fueled expectations of further production cuts. Steelmakers reported weaker profitability last week as elevated coking coal costs and persistently weak finished steel prices continued to squeeze profit margins. Planned maintenance and output reductions are also expected to weigh on near-term demand for iron ore. On the supply side, industry data showed global iron ore shipments totaled 30.38 million tons last week, down 14% from the previous week, with strong export volumes from both Australia and Brazil. Separately, China launched a new mining investment vehicle, Guangyan International Investment Co., to strengthen the country's control over overseas mineral resources.

Iron ore futures rose toward CNY 750 per ton, extending their rebound from near one-year lows after reports that workers at BHP Group’s Port Hedland iron ore terminal in Western Australia will stage an eight-hour strike on July 16, raising concerns over potential supply disruptions. The industrial action will involve operators and maintenance workers at the world’s largest iron ore export hub, as employees push for an agreement that better reflects their specialist skills, challenging working conditions, and significant personal costs. Port Hedland exported 51 million tons of iron ore in May and a record 575 million tons last year, with China accounting for the bulk of shipments. Meanwhile, state-backed China Mineral Resources Group Ltd. recently broadened restrictions on Australian miner Fortescue Ltd., adding further pressure to global iron ore supply.

Iron ore futures climbed above CNY 740 per ton, rebounding from near one-year lows as China’s state-backed commodity buyer expanded restrictions on Australian miner Fortescue Ltd. China Mineral Resources Group Ltd. has instructed several domestic steel mills and traders to refrain from purchasing new US dollar-denominated cargoes of Fortescue’s Super Special Fines product, intensifying its dispute with the miner. The market also drew support from bargain buying following the recent price slump, while easing expectations for US Federal Reserve interest rate hikes this year improved overall risk sentiment. Iron ore had come under sustained selling pressure in recent weeks due to a seasonal slowdown in Chinese demand and rising seaborne supplies, with inventories at Chinese ports reaching a record 160 million tons last week.