Iron Ore Futures Rise Slightly Amid Mixed Global Signals
Iron ore prices ticked up modestly on Monday, supported by increased steel production in China, the world’s largest consumer of the metal. However, gains were capped by mounting concerns over U.S. steel tariffs and the broader economic uncertainty driven by a strong dollar and geopolitical risks.
On the Dalian Commodity Exchange (DCE), the most-traded September iron ore contract rose 0.28% to 705 yuan ($98.13) per metric ton by 0253 GMT. Meanwhile, the benchmark July iron ore contract on the Singapore Exchange was up 0.25% to $94.4 per ton.
Steel Margins Fuel Production Hike in China
The uptick in iron ore pricing follows news that China’s crude steel output rose 0.6% month-on-month in May, driven by higher operating rates at mills capitalizing on improved profit margins.
Data from Mysteel, a Chinese commodity consultancy, revealed that around 60% of blast-furnace mills were operating profitably as of June 12. This resurgence in profitability has emboldened producers, despite weak domestic demand from the sluggish real estate sector.
However, hot metal output, which is a leading indicator of iron ore demand, slipped 0.1% week-on-week to 2.416 million tons as of June 13—suggesting that production may be nearing a temporary peak unless downstream demand strengthens.
US Steel Tariffs Cast a Shadow
On the trade policy front, uncertainty looms. Starting June 23, a swath of imported household appliances—including dishwashers, washing machines, and refrigerators—will face a 50% steel tariff under U.S. policy aligned with former President Donald Trump’s protectionist trade agenda.
These tariffs could have a chilling effect on steel demand globally, especially if manufacturers adjust supply chains or scale back production to mitigate costs. This is particularly relevant for Asian exporters, including China, which has been ramping up steel exports amid weak domestic consumption.
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Chinese Property Sector Still a Drag on Demand
Despite multiple rounds of policy easing, China’s property sector continues to underperform. Official data released Monday showed new home prices fell 0.2% in May, reinforcing concerns that real estate will not provide the demand-side lift that steel and iron ore producers are hoping for.
The construction industry is a key end-user of steel products such as rebar and hot-rolled coil, and continued weakness in the property market will limit sustained growth in steel demand, even with higher production margins.
Commodity Prices Face Dollar Pressure and Geopolitical Tensions
Further complicating the outlook is the strengthening U.S. dollar, driven by safe-haven flows amid escalating tensions in the Middle East. A firmer dollar tends to pressure dollar-denominated commodities like iron ore, making them more expensive for foreign buyers.
With geopolitical uncertainty rising and the Federal Reserve expected to remain cautious, the dollar could stay strong—creating headwinds for bulk commodities.
Steelmaking Inputs and Finished Steel Show Mixed Trends
Other inputs and outputs in the steel value chain showed signs of firming:
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Coking coal: +1.81%
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Coke: +1.04%
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Rebar (Shanghai Futures Exchange): +0.81%
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Hot-rolled coil: +0.88%
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Wire rod: +0.3%
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Stainless steel: +0.04%
These gains reflect optimism among traders and manufacturers, but analysts warn that they may be short-lived unless demand fundamentals improve.
Conclusion: Iron Ore Markets Caught Between Optimism and Uncertainty
While increased Chinese steel output and solid margins provide short-term support to iron ore prices, the macro environment remains uncertain. Factors including:
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Trump-era tariffs reintroduced by the U.S.
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Persistent weakness in China’s property market
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A stronger U.S. dollar
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Muted global trade growth
are collectively capping any bullish breakout in commodity markets.
For now, the iron ore market remains in a wait-and-see mode, tracking steel production trends in China while watching for clarity on Sino-U.S. trade relations and global macro stability.