SINGAPORE: Iron ore futures edged lower on Thursday as investors weighed an uncertain demand outlook against efforts to curb overcapacity in China, while record exports from major producer Brazil further pressured market sentiment.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) was down 0.25% at 793 yuan ($110.45) a metric ton, as of 0313 GMT. The benchmark September iron ore on the Singapore Exchange was 0.05% lower at $101.75 a ton.
“Iron ore futures retreated as investors weighed up a murky demand outlook against efforts to curb overcapacity that could lead to improvements in the economy,” said analysts from ANZ.
Brazil exported a record 41.1 million metric tons of iron ore in July, with the surge attributed to the progress of large projects in China and a resumption of domestic production.
China’s construction steel market is expected to transition from sentiment-driven gains to a more fundamentals-based trajectory in August, according to Chinese consultancy Mysteel. The firm also noted that recent optimism in the sector is fading, with demand-supply dynamics returning to the spotlight.
The average daily hot metal production remains high and is expected to stay strong in August, while improving steel mill profits continue to support the prices of raw materials, said broker Hexun Futures. Meanwhile, a weaker US dollar provided some support to iron ore futures prices as expectations of rate cuts from the Federal Reserve grew amid concerns about partisanship creeping into US institutions.
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