Iron ore futures prices reached a one-week high on Friday, indicating an overall positive trend for the week. This uptick was largely attributed to progress in the ongoing talks between the U.S. and China, alongside sustained demand from China, the world’s largest consumer of iron ore. Nonetheless, the seasonal slowdown in steel consumption acted as a limiting factor to potential gains. The Dalian Commodity Exchange’s most-traded September iron ore contract closed the daytime session with a 0.86% increase at 707.5 yuan ($98.48) per metric ton, marking a weekly gain of 0.6%.
Earlier in the session, the contract peaked at 713.5 yuan per ton, the highest level since May 26. Similarly, the benchmark July iron ore on the Singapore Exchange experienced a 0.9% rise, reaching $95.7 a ton, with a weekly increase of 0.1%, touching $96.4 earlier during the session. Market optimism surged following a rare discussion between U.S. President Donald Trump and Chinese President Xi Jinping, addressing rising trade tensions and competition over crucial minerals. Analysts at Everbright Futures noted that this conversation reflects a potential easing of trade disputes, which has fueled a risk-on sentiment in the market.
In the near term, iron ore demand is expected to remain robust since steelmakers are likely to increase inventories to support ongoing production. Current hot metal output is holding at elevated levels, with mills maintaining low in-plant inventories. According to a survey by consultancy Mysteel, average daily hot metal output was recorded at 2.42 million tons as of early June, reflecting a 2.6% year-on-year increase. However, signs of weakening steel consumption were evident, primarily due to high summer temperatures affecting construction activities.
In related markets, prices for other steelmaking ingredients, such as coking coal and coke, saw increases of 3.18% and 0.67%, respectively. Additionally, most steel benchmarks on the Shanghai Futures Exchange also advanced, with minor variations across different steel products.