Iron ore futures experienced a decline on Thursday, primarily influenced by a renewed focus on dwindling steel consumption during China’s off-peak demand season. The September iron ore contract traded on China’s Dalian Commodity Exchange (DCE) ended the day down by 0.14%, closing at 701 yuan ($97.60) per metric ton. Similarly, the benchmark July iron ore on the Singapore Exchange saw a reduction of 0.8%, bringing it to $94.70 per ton as of 0701 GMT.
Analysts at Galaxy Futures indicated that without significant driving forces, iron ore prices are likely to fluctuate amid the seasonally weak demand. Zhuo Guiqiu, an analyst at Jinrui Futures, noted that there hasn’t been a substantial change in the fundamentals of the iron ore market. The upward momentum previously driven by the rally in coal prices has diminished, resulting in softened ore prices.
However, Zhuo mentioned that downside risks for prices are somewhat constrained due to relatively high hot metal output, despite ongoing production cuts and declining portside inventory. Hot metal output is a crucial metric for assessing iron ore demand. Despite a recent trade truce between China and the United States, there are indications that steel exports are declining, which is negatively impacting demand.
Weak consumption of steel continues to pose risks for feedstock materials as well. In contrast, other steelmaking ingredients such as coking coal and coke recorded gains, albeit at a reduced pace, increasing by 1.68% and 0.56%, respectively, following a substantial rally of over 6% on Wednesday. Meanwhile, steel benchmarks on the Shanghai Futures Exchange displayed little movement, with rebar slightly up by 0.14% and hot-rolled coil down by 0.19%.