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Iron ore futures traded in a tight band on Wednesday, but defied early 2025 fears to post annual gains on the back of resilient demand in top consumer China amid robust steel exports and prospects of improved steel fundamentals.
The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) closed daytime trade 0.57% lower at 789.5 yuan ($112.97) a metric ton, but posted an annual rise of 1.3%.
The benchmark February iron ore SZZFG6 on the Singapore Exchange was up 0.2% at $105.55 a ton, as of 0736 GMT, set for an annual gain of 5.1%.
Prices of the key steelmaking ingredient had come under pressure earlier this year on expectations of a supply glut and forecasts of faltering demand in China.
But China’s consumption proved to be resilient, underpinning iron ore prices, even as crude steel output is set to fall below 1 billion tons this year.
Cost competitiveness of blast furnace-based steelmaking kept operating rates high, boosting iron ore demand, although the cleaner electric-arc-furnace-based steelmakers had to scale down output when margins were squeezed by dwindling local demand and resilient ore prices.
Ballooning steel exports, which are set to hit a record high in 2025 despite growing protectionist measures worldwide, offset sagging demand from the crisis-hit Chinese property sector.
In the near term, ore prices are expected to find support from a flurry of restocking by steelmakers ahead of the Lunar New Year holiday in February. But swelling portside inventories and sluggish steel demand will curb the upside potential.
Other steelmaking ingredients on the DCE were mixed on Wednesday, with coking coal up 0.45% and coke down 1.25%.
Steel benchmarks on the Shanghai Futures Exchange moved sideways. Rebar lost 0.48%, hot-rolled coil fell 0.52%, while wire rod SWRcv1 gained 5.66% and stainless steel SHSScv1 firmed 0.57%.
($1 = 6.9883 Chinese yuan)
(Reporting by Ruth Chai and Amy Lv; Editing by Sonia Cheema and Subhranshu Sahu)