FX.co ★ Iron Ore Holds Near 6-Month Low

Iron ore futures in China are currently trading at CNY 705 per tonne, maintaining a narrow range since they dipped to a six-month low of CNY 690 last month. This stability is largely due to ongoing macroeconomic challenges that continue to affect the Chinese construction and manufacturing sectors. The National Bureau of Statistics reported that the Manufacturing Purchasing Managers' Index fell to a 16-month low in April, with new export orders decreasing at their fastest rate since 2022, impacting the outlook for steel sheet consumers. Additionally, there are concerns that weak consumer demand may persist, potentially pushing down property prices and threatening the financial stability of developers, thereby diminishing a significant source of global steel demand. The Chinese government has also highlighted the issue of overcapacity in steel mills, suggesting that output cuts may be considered by 2025, which could affect ore procurement for production. Nevertheless, China's crude steel output increased by 3.6% year-on-year to 93 million tons in March. On the policy side, more significant declines were averted thanks to rate cuts by the People's Bank of China, which provided some economic support ahead of upcoming trade discussions with the United States.