SINGAPORE: Iron ore futures advanced on Thursday, supported by inventory restocking at Chinese steel mills following the National Day holiday, although profit margins and concerns over trade restrictions on steel weighed on market sentiment.
The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) was up 1.09% at 791.5 yuan ($111.03) a metric ton, as of 0256 GMT.
The benchmark October iron ore on the Singapore Exchange traded 0.14% higher to $104.35 a ton.
Following the Chinese National Day holiday, some steel mills have begun replenishing inventories, though profit margins remain under pressure due to elevated coke prices, according to broker Hexun Futures.
Trading activity in the iron ore market has been subdued over the past week amid the closure of Chinese markets.
However, analysts from ANZ noted that the market is likely to be concerned with further efforts to limit China’s steel exports.
In Europe, the European Commission has proposed reducing tariff-free steel import quotas by almost half to support the competitiveness of EU steelmakers.
Rising imports and US tariffs have left EU steel producers operating at only 67% of capacity, while these measures aim to push that up towards 80%.
In late September, the EU had announced plans to impose tariffs of 25% to 50% on Chinese steel and related products.
China shipped around 4%, or 368,000 tons, of its 2024 steel exports to the EU.
Meanwhile, China’s state iron ore buyer had paused purchases of iron ore cargoes from Australian miner BHP during annual price negotiations earlier this month.
The standoff risks exerting further pressure on steel margins.
Other steelmaking ingredients on the DCE lost ground, with coking coal and coke down 0.7% and 1.09%, respectively.
Steel benchmarks on the Shanghai Futures Exchange were mixed. Rebar dipped 0.03% and wire rod was flat, while hot-rolled coil edged up 0.09%, and stainless steel gained 0.12%.
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