FX.co ★ Iron Ore Jumps on Strong Demand

Iron ore futures experienced a notable increase, rising approximately 2% to exceed CNY 808 per tonne on Tuesday, marking a near seven-week peak driven by anticipated heightened demand from China's market. This upward movement in prices was attributed to the resumption of steel production in key furnace hubs as output restrictions related to China’s military parade were lifted. Initially, these measures were set to curtail pollution and maintain clear skies. Further bolstering prices were improved profit margins for steel manufacturers following Beijing's commitment to reduce capacity in the steel sector to mitigate deflationary pressures faced by producers, which encouraged ore suppliers to elevate their offer prices. Additionally, China's iron ore imports rose to over 105 million tonnes in August, reflecting a 1.3% increase from the previous month. Despite these developments, the overall demand outlook remains tepid, influenced by weak monetary indicators and an official construction PMI that indicated the sector's first contraction since January.