June 10, 2025 – Global Commodity Watch:
Iron ore futures edged lower on Tuesday as traders weighed mixed macroeconomic indicators from China — the world’s largest consumer of steel and iron ore — while resilient mill margins offered partial support to the declining prices.
On the Dalian Commodity Exchange (DCE), the most-traded September contract slipped 0.43% to 696.5 yuan ($97.00) per metric ton by 02:55 GMT. Meanwhile, the Singapore Exchange’s July iron ore benchmark dropped 1.03% to $93.10 per ton, reflecting continued caution in global markets.
China’s Steel Output and Economic Indicators Weigh on Sentiment
The market responded sharply to Monday’s data from China’s National Bureau of Statistics (NBS), showing:
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Crude steel output in May fell 6.9% year-on-year to 86.55 million tons, underscoring weakening industrial activity.
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New home prices continued to decline, extending a two-year downturn in the property sector despite multiple rounds of stimulus.
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Factory activity growth hit a six-month low, raising concerns about broader industrial weakness.
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On a more optimistic note, retail sales showed improvement, offering some signs of life in domestic consumption.
These figures indicate a two-speed economy, where a sluggish real estate sector and weakening exports are being partially offset by consumer resilience.
Strong Mill Margins Prevent Deeper Cuts in Production
Despite weakening demand signals, steel production remains elevated. According to Galaxy Futures, blast furnace production is peaking, but high margins continue to incentivize mills to maintain output.
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As of June 12, 60% of blast-furnace steel mills in China reported positive margins, said consultancy Mysteel.
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This profitability is helping prevent drastic reductions in iron ore consumption, limiting the extent of price declines.
Supply Tightness Offers Support
In terms of supply:
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Port arrivals of iron ore fell 8.62% week-on-week to 23.85 million tons as of June 13, according to Mysteel.
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Lower supply inflows at Chinese ports may help stabilize prices, especially if demand stabilizes or rebounds in the second half of the year.
Other Steelmaking Ingredients Show Mixed Movement
While iron ore declined, other key inputs in steelmaking gained modestly:
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Coking coal rose 0.77%
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Coke increased 0.74%
This divergence highlights how raw material dynamics remain differentiated based on supply tightness and policy shifts.
Steel Futures in China Slide Across Categories
Steel product futures on the Shanghai Futures Exchange posted minor losses:
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Rebar: -0.03%
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Hot-rolled coil: -0.13%
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Wire rod: -0.67%
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Stainless steel: -0.6%
These drops signal that demand sentiment in construction and manufacturing sectors remains subdued, mirroring the real estate and infrastructure investment trends.
PSX Gains Nearly 500 Points Amid Global Tensions and Stable Policy Rate by SBP
Macro Context: Traders Eye Sino-US Trade Talks
Adding to the uncertainty, global investors await further clarity on Sino-US trade negotiations, particularly after signs of temporary detente. A durable resolution could reignite global trade volumes and lift base metal demand, but for now, sentiment remains cautious.
Outlook: Iron Ore Caught Between Demand Risks and Profit-Driven Production
With macroeconomic data sending mixed signals, iron ore markets may remain range-bound in the near term. The balance between weaker end-user demand and strong mill profitability is currently keeping price swings contained.
For traders, the key triggers to watch include:
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Policy interventions in China’s housing and steel sectors
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Port inventory trends
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Sino-US geopolitical developments
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Monetary stimulus clues from China’s central bank
