Iron Ore Hits 1-Month High

Iron ore futures climbed above CNY 720 per ton, reaching a one-month high as investors anticipated a recovery in demand due to seasonal factors ahead of the September peak construction season. Construction activity in top consumer China typically picks up ahead of winter, strengthening the outlook for demand for steel and raw materials. China’s National Development and Reform Commission also reportedly held meetings in recent weeks urging local governments to accelerate the construction of major projects. Meanwhile, higher freight and oil costs provided additional support for iron ore prices, although rising coking coal prices continued to squeeze steel mill margins. Industry data also showed that the blast furnace operating rate among Chinese steel mills edged lower last week, while daily hot metal output also declined.

Iron ore futures rose above CNY 720 per ton, moving toward one-month highs on hopes for stronger demand in top consumer China ahead of the September peak construction season, while Beijing signaled fresh policy support. Markets are anticipating restocking ahead of the seasonal peak in steel demand as construction activity picks up before winter. China will also introduce a new package of measures to expand domestic demand and support economic growth, according to Vice Finance Minister Liao Min. Additionally, China’s National Development and Reform Commission reportedly held consecutive meetings last week urging local governments to accelerate the construction of major projects. Meanwhile, industry data showed that China’s total steel exports rose 10.7% week-on-week to 2.36 million tons in the week through August 24, marking the fastest weekly increase in nearly five weeks as the impact of Typhoon Dolphin subsided.

Iron ore futures hovered around CNY 710 per ton, with underlying demand concerns persisting despite fresh Chinese stimulus signals. China’s steel output fell 3.6% year-on-year to 76.93 million tons in July, the lowest for the month since 2017, while inventories remained elevated. Weak property activity weighed on demand, with home prices down 3.2% year-on-year, while only about one-third of steelmakers were profitable. China’s July iron ore imports also fell 4% month-on-month to 108.09 million tons as shrinking steel margins prompted some mills to undertake maintenance. Meanwhile, fresh stimulus measures and expectations of stronger demand ahead of the September peak season offered support, with the government planning measures to boost domestic demand and growth and the NDRC urging local governments to accelerate major projects.