Iron Ore Rises on Pre-Holiday Restocking

Iron ore futures climbed above CNY 710 per ton, recovering from one-month lows as Chinese steelmakers increased seaborne purchases ahead of the extended National Day holidays in early October. Industry data showed that daily trading volumes for seaborne cargoes surged 43% to 1.41 million tons on September 16 from the previous day. The demand outlook also improved after several Chinese steelmakers pledged to curb production in an effort to reduce steel inventories amid rapidly shrinking margins. Profitability across China’s steel sector deteriorated sharply, pressured by high production costs and weak steel demand. Recent data also showed that new home prices in China extended their decline in August, underscoring the continued drag from the country’s prolonged property market downturn.

Iron ore futures fell below CNY 710 per ton, reaching one-month lows as weak market fundamentals continued to weigh on prices. Industry data showed global iron ore shipments increased by 1.59 million tons to 35.17 million tons in the week ended September 13, pointing to ample supply. Elevated coke prices also continued to pressure steelmakers’ profit margins, prompting some producers to scale back operations and undertake maintenance. Chinese steel demand weakened further in the third quarter amid a continued slowdown in construction activity. Data showed China’s new home prices extended their decline in August, highlighting the persistent drag from the country’s prolonged property downturn. Meanwhile, steel mills may see some incentive to replenish iron ore inventories ahead of the extended National Day holidays in early October.

Iron ore futures fell to around CNY 710 per ton, declining for a fourth consecutive session as worsening profitability at steel mills continued to weigh on the demand outlook for the key steelmaking ingredient. Industry data showed that steel mill profitability in China dropped sharply to 7.79% in the latest week, as persistently high coke prices continued to squeeze margins. Chinese steel demand also weakened further in the third quarter amid an ongoing slowdown in construction activity. Meanwhile, overseas steel demand remained relatively resilient but showed signs of a delayed recovery. Iron ore inventories at major Chinese ports fell nearly 1% to 151.29 million metric tons last week, providing some support to prices. There were also signs of restocking, with steel mills’ imported iron ore inventories rising by 1.41 million metric tons to 90.44 million metric tons over the same period.