Iron ore futures declined on Wednesday as rising input costs and swelling inventories pressured steel mill margins, signaling weaker demand amid a seasonal supply rebound.
The most-active January contract on China’s Dalian Commodity Exchange fell 1.11% to 714 yuan ($106.20) per ton, while the October reference contract on the Singapore Exchange dropped 1.8% to $97.55 per ton. Analysts cited sustained pressure from elevated coking coal prices, which have prompted a fourth round of increases ranging from 100 to 110 yuan per ton since September 1, according to consultancy Mysteel.
Port data showed iron ore inventories at Australia’s and Brazil’s seven major ports climbed by 1.33 million tons to 14.74 million tons in the week ending August 30, the second-highest level since the third quarter. The buildup reflects a seasonal pickup in shipments from key exporters, despite ongoing maintenance disruptions at 17 Chinese steel mills since August.
Steel industry analysts noted that coking coal prices are eroding mill profitability and continue to dictate short-term market direction. Guoyuan Futures highlighted that Australian and Brazilian shipments are entering a seasonal recovery, reinforcing a backdrop of structurally strong supply against subdued demand.
The decline in iron ore prices follows a broader trend of tightening margins in China’s steel sector, where mills have faced volatile raw material costs and softer domestic consumption.
