Iron ore uneasy over China weather, steel demand

Iron ore futures rebounded modestly on Tuesday as investors remained concerned over China’s steel demand. Rebar led the way for the rebound in Asia as investors became concerned over the latest environmental curbs in Tangshan which may lead to temporarily closure of many blast furnaces and sintered machines in the area.

Iron ore failed to build on the momentum as weak physical trades, declining steel demand and mixed Chinese data kept iron ore prices under pressure.

Summers in China are typically a slow period for steel demand as heavy rains and heat interfere with construction. China, the world’s biggest steel consumer, is forecasting several storms in its eastern coastal provinces this week.

“The current demand for steel products has weakened and apparent consumption is slumping, and the off-peak season is having a relatively big impact on the market”, said Huatai Futures in a note.

Meanwhile, the latest PMI data from China offered a mixed view into the second largest economies’ economic recovery. The official PMI rose from 50.6 to 50.9, signalling the nation’s gradual recovery from the pandemic. However, the steel PMI painted a less rosy picture as it slid from 50.9 to 49.3.

Futures in Singapore held above $98 for the most part this morning, with Jul trading in tight ranges between 98.25 and 98.35. Aug traded 95.0 and 95.5.