FX.co ★ Iron Ore Falls on Demand Concerns

Iron ore futures declined to approximately CNY 694 per tonne on Wednesday, reaching their lowest in nearly six weeks. This downturn is attributed to seasonal dips in demand and production restrictions at Chinese steel mills. Analysts have highlighted unfavorable weather conditions, including torrential rains hampering construction activities in southern China and high temperatures affecting northern operations. Recent statistics revealed a 6.9% decrease in China's steel production in May, marking its initial drop in several months, as the government strives to address overcapacity issues in the industry. This reduction suggests a diminished demand for raw materials, negatively impacting the iron ore market sentiment. On the global front, there is an air of caution among investors. Despite widespread expectations that the US Federal Reserve will maintain current interest rates in its forthcoming decision, hopes for further rate cuts have diminished amidst persistent trade-related uncertainties and inflation concerns triggered by escalating oil prices. Additionally, geopolitical tensions in the Middle East have further contributed to the restrained market atmosphere.