SINGAPORE: Iron ore futures edged lower on Friday but remain on track for a weekly gain, supported by China’s record-high steel exports, robust mill margins, and low inventories.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) traded 0.57% lower at 787 yuan ($109.58) a metric ton, as of 0318 GMT.
Still, the contract is up 0.57% so far this week. The benchmark September iron ore on the Singapore Exchange was 0.49% lower at $101.75 a ton, but up 1.9% so far this week.
Major miners are paying out their lowest dividends in years after reporting lower half-year earnings, seeking to retain cash for their major development projects.
BHP will spend up to $7.4 billion on its Jansen potash mine in Canada, while Rio Tinto expects to spend more than $13 billion in the next three years to develop new iron ore mines in Western Australia as existing reserves decline.
China’s steel exports continued their rise in July, up 1.7% month-on-month, with the year-to-date tally at the highest level in records going back to 1990.
This comes despite the introduction of more trade barriers by countries worried that cheap Chinese steel is undercutting their domestic manufacturers.
Meanwhile, iron ore imports increased 2% year-on-year in July, well above average monthly imports for the year, as healthy mill margins and low steel inventories motivated mills to restock, said analysts from ANZ.
Broadly, ratings agency S&P Global has maintained China’s long-term credit at A+, noting that its robust fiscal stimulus measures are expected to support the country’s economic growth, even as it faces challenges from the property sector and tariff pressures.
Other steelmaking ingredients on the DCE fell, with coking coal and coke down 0.82% and 1%, respectively.
Steel benchmarks on the Shanghai Futures Exchange mostly lost ground. Rebar dipped 0.8%, hot-rolled coil lost 0.87%, and wire rod eased 0.64%, while stainless steel edged up 0.08%.
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