Iron ore slides again as China hints at steel output cuts
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Iron ore futures extended their decline in April, logging a third straight monthly loss as market sentiment weakened amid growing expectations of steel production curbs in China and seasonal demand softness ahead of the Labour Day holiday. Prices remain under sustained pressure as industry leaders warn of deteriorating fundamentals in the domestic steel sector.
On the Dalian Commodity Exchange (DCE), the most-traded September iron ore contract (TIO1!) settled 0.78% lower at 703.5 yuan ($96.81) per metric ton on Wednesday. For the month, the contract dropped 3.96%. On the Singapore Exchange, benchmark May futures (SZZFK5) traded 0.67% lower at $97.80/ton as of 0711 GMT, marking a monthly decline of 3.16%.
Downward momentum was reinforced by signals from senior Chinese industry officials, including Luo Tiejun, Vice-Chairman of the China Iron and Steel Association (CISA), who called for coordinated steel output reductions due to ongoing demand weakness and global trade tensions. Although no formal mandate has been issued by Beijing, guidance from key industry stakeholders and commentary from Baoshan Iron & Steel (600019)—which noted nationwide cuts are “likely”—have been interpreted as a precursor to more aggressive production rationalization.
Restocking activity among Chinese steel mills has slowed significantly, according to ANZ, reflecting weakened buying interest ahead of the May 1–5 Labour Day holiday. Trading will resume on May 6, but sentiment is unlikely to recover quickly amid the macro headwinds.
The backdrop is further complicated by weak manufacturing data. China's factory activity contracted at the fastest pace in 16 months in April, according to PMI data released Wednesday. The downturn was exacerbated by President Donald Trump’s new “Liberation Day” tariff package, which disrupted recent signs of industrial stabilization.
The weakness extended across the steel complex and related commodities. On the DCE, coking coal (ACT1!) and coke (DCJcv1) dropped 0.59% and 0.97%, respectively. On the Shanghai Futures Exchange, steel benchmarks also underperformed: rebar (RBF1!) and hot-rolled coil (EHR1!) each fell approximately 0.4%, while wire rod (SWRcv1) and stainless steel (HRC1!) slipped 0.2% and 0.24%, respectively.
The bearish tone across raw materials and finished steel markets reflects growing investor concern over demand fragility, excess capacity, and policy uncertainty. With export dynamics deteriorating and domestic consumption showing no signs of reacceleration, iron ore prices may remain capped in the near term unless stronger stimulus or demand-side surprises emerge post-holiday.
On the Dalian Commodity Exchange (DCE), the most-traded September iron ore contract (TIO1!) settled 0.78% lower at 703.5 yuan ($96.81) per metric ton on Wednesday. For the month, the contract dropped 3.96%. On the Singapore Exchange, benchmark May futures (SZZFK5) traded 0.67% lower at $97.80/ton as of 0711 GMT, marking a monthly decline of 3.16%.
Downward momentum was reinforced by signals from senior Chinese industry officials, including Luo Tiejun, Vice-Chairman of the China Iron and Steel Association (CISA), who called for coordinated steel output reductions due to ongoing demand weakness and global trade tensions. Although no formal mandate has been issued by Beijing, guidance from key industry stakeholders and commentary from Baoshan Iron & Steel (600019)—which noted nationwide cuts are “likely”—have been interpreted as a precursor to more aggressive production rationalization.
Restocking activity among Chinese steel mills has slowed significantly, according to ANZ, reflecting weakened buying interest ahead of the May 1–5 Labour Day holiday. Trading will resume on May 6, but sentiment is unlikely to recover quickly amid the macro headwinds.
The backdrop is further complicated by weak manufacturing data. China's factory activity contracted at the fastest pace in 16 months in April, according to PMI data released Wednesday. The downturn was exacerbated by President Donald Trump’s new “Liberation Day” tariff package, which disrupted recent signs of industrial stabilization.
The weakness extended across the steel complex and related commodities. On the DCE, coking coal (ACT1!) and coke (DCJcv1) dropped 0.59% and 0.97%, respectively. On the Shanghai Futures Exchange, steel benchmarks also underperformed: rebar (RBF1!) and hot-rolled coil (EHR1!) each fell approximately 0.4%, while wire rod (SWRcv1) and stainless steel (HRC1!) slipped 0.2% and 0.24%, respectively.
The bearish tone across raw materials and finished steel markets reflects growing investor concern over demand fragility, excess capacity, and policy uncertainty. With export dynamics deteriorating and domestic consumption showing no signs of reacceleration, iron ore prices may remain capped in the near term unless stronger stimulus or demand-side surprises emerge post-holiday.