Iron ore rises on supply concerns

Iron ore futures climbed to around CNY 716 per tonne on Wednesday, snapping a two-day losing streak as declining shipments from top exporters Australia and Brazil stoked supply concerns. Global seaborne shipments also showed a slight drop, adding upward pressure on prices amid fears that tightening supply could outpace demand in the near term.

Supporting the rally, a private survey revealed that factory activity in China unexpectedly returned to expansion in June, suggesting renewed momentum in the world’s top iron ore consumer amid a temporary easing in US-China trade tensions.

This rebound in manufacturing activity raised hopes that industrial demand for raw materials like iron ore could strengthen in the coming months, providing further support to prices. Additionally, hot metal output—a key indicator of iron ore demand—continued to rise on a monthly basis, signaling sustained production in steel mills despite lingering challenges.

However, gains were capped by ongoing weakness in China’s property sector, which continues to weigh on broader market sentiment. The slowdown in real estate construction, a major driver of steel consumption, tempered optimism around the iron ore market’s recovery.

Adding to the cautious outlook, the China Iron and Steel Association called for stricter controls on certain steel products to retain more supply domestically, a move aimed at curbing steel exports and stabilizing local prices. This policy could limit upward pressure on iron ore prices by reducing overseas demand for Chinese steelmaking inputs.

Overall, the iron ore market remains finely balanced between supply-side constraints and demand uncertainties, with traders closely monitoring developments in Chinese manufacturing, infrastructure spending, and regulatory interventions for cues on the next price direction.