Iron Ore Rises on Improving Fundamentals

Iron ore futures climbed above CNY 710 per ton, recovering modestly from multi-month lows as signs of tightening supply and improving steel demand in top consumer China provided support. Industry data showed iron ore inventories at major Chinese ports edged down to around 156.8 million tons, pointing to potentially tighter supply conditions in the coming weeks. Daily hot metal production at Chinese steel mills also increased to 2.38 million tons, up 0.17 million tons from the previous week, while mill profitability improved to 33.77%, rising 1.74 percentage points from the previous month. Meanwhile, the People’s Bank of China is set to conduct a 1 trillion yuan reverse repurchase operation, which could provide additional support to economic activity by improving liquidity and credit availability.

Iron ore futures declined toward CNY 700 per ton, approaching 14-month lows as weak profitability among Chinese steelmakers continues to constrain the potential for a meaningful recovery in ore demand. Recent data also showed China imported 108.086 million tons of iron ore and concentrates in July, down 4.09% from June but still 3.5% higher than a year earlier. Meanwhile, slower consumer and producer inflation in China last month pointed to persistent weakness in domestic demand. On the supply side, however, tightening shipments continued to offer some support to prices. Industry data showed global iron ore shipments fell by 1.38 million tons in the week through August 9 to around 32 million tons, while volumes arriving at Chinese ports dropped by 13.1 million tons to 18.9 million tons.

Iron ore futures climbed above CNY 720 per ton, reaching near two-week highs as signs of tightening near-term supply and possible disruptions supported prices. Industry data showed global iron ore shipments declined by 1.38 million tons in the week through August 9 to around 32 million tons, while shipments arriving at Chinese ports dropped by 13.1 million tons to 18.9 million tons. Supply concerns also increased after more workers joined a strike at BHP’s Port Hedland iron ore export hub in Western Australia, although vessel loading operations have continued. Meanwhile, China imported 108.086 million tons of iron ore and concentrates in July, down 4.09% from June but up 3.5% from a year earlier, according to recent data. Figures released over the weekend also showed China’s consumer and producer inflation slowed in July, highlighting continued weakness in domestic demand.