Iron ore rises on easing demand concerns

Iron ore futures climbed above CNY 774 per tonne on Thursday, extending gains for a second straight session as mandated production cuts ahead of China’s September 3 military parade turned out to be less severe than initially feared.

Authorities in Tangshan, one of China’s key steelmaking hubs, ordered mills to reduce sintering output by 30% from August 25 and blast furnace output by 40% from August 31, compared with earlier market talk of a full shutdown. The shorter duration and milder scope of restrictions suggest only a limited hit to near-term ore consumption, easing some of the recent bearish sentiment.

Still, the overall backdrop for iron ore remains fragile. Chinese steel demand has been weighed down by weak property investment, sluggish construction activity, and adverse summer weather conditions, which have curbed consumption of steel products. Rising inventories across mills and traders continue to signal oversupply pressures, limiting the scope for a sustained price rebound. Market participants are now watching closely whether Beijing will roll out further targeted stimulus for infrastructure and real estate to shore up demand in the months ahead.

On the corporate side, BHP Group this week reported its weakest annual underlying profit in five years, posting $10.16 billion for the year ended June 30, a 26% drop from the prior year. The miner cited softer Chinese demand as the main headwind, underscoring China’s critical role in global iron ore markets. The country accounts for around 75% of global seaborne imports and produces just over half of the world’s steel, making shifts in Chinese consumption pivotal to global price dynamics.

Looking ahead, analysts suggest iron ore prices may remain rangebound as the market balances limited downside from milder-than-expected production curbs against persistent structural headwinds, including subdued property sector activity, high inventories, and steady global supply from major producers in Australia and Brazil. Any signs of stronger policy support from Beijing or a recovery in downstream demand could provide upside momentum, but for now the market appears set for cautious trading.