FX.co ★ Iron Ore Holds Rebound from 5-Month Low

Iron ore futures increased to CNY 780 per tonne, marking a recovery from the five-month low of CNY 755 observed on December 12th. This upward movement was driven by a reduction in output from major suppliers, despite a generally tepid demand for ferrous metals. Chinese steel mills faced restricted purchasing options for their iron feedstock, as restrictions by the state-owned buyer CMRG prohibited acquiring fines from BHP's Jimblebar and Jingbao sources. Concurrently, there was a slight recovery in profit margins for mills, which led to a gradual rise in hot metal production towards the end of the year after it had bottomed out in mid-September. Nonetheless, persistent pessimism among Chinese goods producers and construction companies continued to constrain the recovery. The NBS construction PMI indicated a fourth consecutive contraction for China, the largest consumer of ferrous metals globally. Furthermore, the looming default of Vanke intensified worries about the solvency of property developers.