- Dalian iron ore rose 1.3% as China imposed steel output limits.
- Demand from construction, exports, and manufacturing remains strong.
- Shipments from Australia, Brazil dip; Rio Tinto cites weather issues.
Iron ore futures prices rose on Thursday, supported by strong steel demand due to production restrictions in leading Chinese steel manufacturing areas. The September iron ore contract that is most traded on China's Dalian Commodity Exchange (DCE) climbed 1.3 percent to 781.5 yuan ($108.87) per metric ton by 0337 GMT. The standard August iron ore on the Singapore Exchange rose by 0.66 percent to $100.6 per ton.
Steel output in China has recovered, propelled by a swift build-up of construction materials, strong manufacturing demand, and continued resilience in steel exports, according to a note from broker Galaxy Futures. Galaxy reported that major steel-producing areas Shanxi and Tangshan have begun to enforce output limitations.
According to analysts, shipments of iron ore from leading suppliers Australia and Brazil have decreased after a surge by the end of the previous quarter. Rio Tinto recorded its highest second-quarter iron ore production since 2018; however, shipments fell short of analyst expectations, marking their lowest level for the half since 2014 due to weather-related disruptions.
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ANZ analysts mentioned in a note that heightened mill margins are beginning to enhance optimism regarding demand. In the meantime, BHP announced that the expenses of creating a "green iron" sector in Australia are still excessively high, even as Australia and China finalized a deal this week to collaborate on decarbonising the steel supply chain.
Australia meets 60 percent of China's demand for iron ore, but it extracts lower-grade iron ore that cannot be directly used to produce steel with renewable energy. Other steel production components on the DCE decreased, with coking coal and coke dropping by 0.66 percent and 0.83 percent, respectively.
The majority of steel benchmarks on the Shanghai Futures Exchange rose. Rebar went up 0.26 percent, hot-rolled coil surged 0.68 percent, wire rod gained 0.39 percent and stainless steel dropped 0.08 percent.