Iron Ore Slips on Demand Concerns

Iron ore futures slipped below CNY 750 per ton, resuming their decline as seasonally soft demand and weakening steel mill margins in top consumer China continued to weigh on the market. A number of Chinese steelmakers began maintenance work on production equipment, curbing demand for raw materials. Industry data also showed average daily hot metal output, a key indicator of iron ore consumption, fell for a third consecutive week to 2.38 million tons as of July 23, the lowest level since April 3. Meanwhile, investors are awaiting the upcoming Politburo meeting for potential stimulus measures that could provide support to the economy. Separately, Fortescue Executive Chairman Andrew Forrest called on China and Australia to engage in fair negotiations as the miner faces growing pressure from Beijing’s state-backed iron ore buyer over prolonged supply talks.

Iron ore futures hovered above CNY 750 per ton, recovering after touching two-week lows as resilient Chinese steel production and robust import demand supported prices despite weakness in the property sector. China's crude steel output averaged 2.79 million tons per day in June, the highest since March, while iron ore imports climbed 6.4% year-on-year to a six-month high of 112.69 million tons. Demand for imported ore was further underpinned by lower domestic production and inventory restocking, with port stockpiles declining to 156.6 million tons in the week ended July 17 from a record 166.9 million tons in mid-March. However, gains remained capped by ample global supply, the ramp-up of Guinea's Simandou project, and continued weakness in China's property market, where first-half real estate investment fell 18%, and construction starts dropped 23.4% year-on-year. Optimism over further Beijing stimulus following softer-than-expected second-quarter growth also supported sentiment.

Iron ore futures dropped below CNY 740 per ton on Wednesday, falling to their lowest level in two weeks as rising global supply coincided with a softer demand outlook in top consumer China. Brazilian miner Vale reported its strongest second-quarter production since 2018, with iron ore output rising 0.8% from a year earlier and exceeding market expectations. High inventories and ample physical supply across China also weighed on prices. On the demand side, persistent rainfall in southern China and extreme heat across northern regions continued to disrupt construction activity, reducing steel consumption. Industry data also showed blast furnace capacity utilization at surveyed steel mills fell below 90% last week, while mill profitability declined to around 37%.