Iron Ore Holds Rebound from Five-Month Low Despite Weak Chinese Demand

Beijing | EcoPulse24

Iron ore futures held their gains during today's trading, hovering near 780 yuan per ton and continuing their rebound from the five-month low of 755 yuan seen on December 12. This recovery was primarily supported by reduced supply from leading producers, even as demand for ferrous metals remained subdued.

The main support came from lower production by key suppliers. At the same time, Chinese steel mills faced restrictions on purchase options after companies governed by the CMRG buyer rules were barred from buying fine ores from BHP’s Jimblebar and Jingbao sources, reducing available supply.

Data also showed a modest improvement in steel mill profit margins, which led to a slight increase in hot metal output by year-end after hitting a low in mid-September, supporting short-term iron ore prices.

Conversely, the rebound remained limited due to ongoing pessimism among Chinese commodity and construction producers. The NBS Construction PMI indicated contraction for the fourth consecutive month in the world's largest consumer of ferrous metals. Financial distress among property developers - particularly as Vanke neared default - added to the downward pressure on demand expectations, capping any strong price gains.

Overall, iron ore's performance reflects a fragile balance between supply constraints and limited operational improvements at mills on one side, and structurally weak demand from China’s construction and real estate sectors on the other, keeping prices within a cautious rebound range unless clearer signs of demand recovery emerge.