Iron ore steadied after paring earlier losses as investors weighed dovish signals from Japan regarding potential monetary tightening, while signs of increased supplies of the raw material continued to cloud the market outlook.
The steelmaking metal followed a broader rally among Asian stocks after the Bank of Japan’s deputy governor said it wouldn’t raise interest rates if markets were unstable, reassuring investors unnerved by a recent surge in the yen.
Iron ore has been relatively resilient despite the sharp moves in the currency market this week. But it is still down 27% so far this year as consumption from China, the biggest consumer, struggles to keep up amid a prolonged property crisis. The demand weakness has also pushed spot steel rebar prices in the country toward the lowest since April 2017.
Shipments of iron ore out of Brazil, one of the major exporters, have increased. Daily average exports were 1.71 million metric tons in the 22 trading days of July, according to official data. That’s higher than the 1.66 million tons a day in June, and 1.53 million tons a day in July 2023.
“Global iron ore shipments have increased slightly, with supply from Australia, Brazil and other non-mainstream sources staying high,” Huatai Futures Co. said in a note. “The current iron ore market is oversupplied, alongside a high inventory level. The operating and capacity utilization rates of blast furnaces have dropped as some domestic mills are making losses.”
In the latest sign China’s economy is still stuttering, factory activity in July contracted for a third straight month. According to Bloomberg Economics, the nation’s price data for July due Friday will probably show demand still in the doldrums, with deflation in factory gate prices likely deepening for the first time since March.
Iron ore futures in Singapore were little changed at $102.40 a ton as of 11:24 a.m. local time, after sliding 1.3% on Tuesday. Prices in Dalian fell, while steel futures in Shanghai edged higher.
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