Iron ore futures edged higher on Wednesday, supported by improved diplomatic and trade ties between Australia and China, the world’s largest iron ore producer and consumer, respectively. However, broader market enthusiasm remained tempered by persistent weakness in China’s property sector, a major driver of steel demand.
The September iron ore contracttheDalia rose 1.11% to 773.5 yuan ($107.71) per metric ton by 03:03 GMT, while the benchmark August contract on the Singapore Exchange climbed 0.84% to $99.75 a ton.
Diplomatic Momentum Supports Market
The gains follow a high-level meeting in Beijing between Australian Prime Minister Anthony Albanese and Chinese President Xi Jinping, during which both leaders agreed to initiate a Policy Dialogue on Steel Decarbonisation. The initiative is expected to grant Australia deeper insight into China’s steel planning and emissions strategy.
Albanese also announced that the two countries would review their decade-old Free Trade Agreement (FTA), signaling an intention to upgrade economic engagement. Accompanying the Prime Minister were top mining executives from Rio Tinto, BHP, and Fortescue, who met with Chinese steel industry representatives earlier in the week.
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Strong Q2 Output and Manufacturing Demand
Supporting the market was Rio Tinto’s latest quarterly report, revealing a 13% quarter-on-quarter increase in shipments and its strongest Q2 production since 2018.
In addition, demand for steel in China’s manufacturing sector remains resilient, with expectations of supply-side policy support boosting prices. Broker Galaxy Futures noted that steelmakers are preparing for upcoming demand from industrial sectors.
China’s Property Sector Remains a Drag
Despite the positive momentum, weak fundamentals in China’s real estate market continue to dampen sentiment. According to official data:
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June crude steel output fell 9.2% YoY
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H1 2025 production is the weakest since 2020
Analysts at ANZ said that while demand is holding up in some sectors, the property slowdown has offset recent optimism.
Mixed Performance Across Steel Products
Other steelmaking inputs on the DCE saw declines:
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Coking coal: -0.6%
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Coke: -0.96%
Meanwhile, most steel benchmarks on the Shanghai Futures Exchange were in the red:
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Rebar: -0.26%
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Hot-rolled coil: -0.25%
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We: -0.09%
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Stainless steel: +0.12%