Iron ore futures rose for a second straight session on Friday, supported by higher-than-expected hot metal output from steelmakers. However, concerns over demand in top consumer China and high portside stocks pushed prices down for a third consecutive week.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) climbed 1.97% to 827.50 yuan ($114.05) per metric ton. Despite the daily gain, the contract has dropped 1.7% for the week so far.
The benchmark July iron ore on the Singapore Exchange also gained 0.23% to $107.1 per ton, as of 0718 GMT.
The rise in iron ore prices was supported by data from consultancy Mysteel, which showed that the average daily output of hot metal among surveyed steelmakers increased by 1.5% from the previous week to 2.39 million tons as of June 14, the highest since November 2023, beating market expectations.
Hot metal is a blast furnace product and a key indicator of ore demand. The increase in hot metal output suggests stronger than anticipated demand for iron ore.
However, concerns over China’s property sector and high portside inventories continue to weigh on the outlook for iron ore prices. China’s central bank held a meeting on Wednesday to promote financial support for affordable housing in a bid to revive the embattled property sector, but analysts believe more measures are needed to provide consumer confidence.
ANZ analyst Soni Kumari said, “The structural trends suggest that the market is going to see more subdued performance rather than substantial recovery. So every rally will be a selling opportunity.”
BMI Research also noted that the “strong build-up of iron ore inventories at Mainland Chinese ports, rising to 147.3 mnt as of June 7, has the potential to place a cap on prices in the coming months.”
Other steelmaking ingredients on the DCE, such as coking coal and coke, also advanced on Friday.