FX.co ★ Iron Ore Holds Firm on Robust Demand

Iron ore futures remained steady above CNY 798 per tonne on Wednesday, close to a one-week high, driven by indications of strong demand. The robust profitability within China’s steel industry is motivating mills to enhance production, thus increasing the demand for iron ore. The firmness in prices is also attributed to Beijing's intensified efforts to curtail excess steel production capacity. However, experts warn that despite the policy emphasis on overcapacity, China's likelihood of embarking on supply-side reforms at the scale seen between 2016 and 2018 is low, due to the persistent weakness in the labor market. Meanwhile, investors are keeping a close watch on the developments in US-China trade negotiations. President Donald Trump remarked that an agreement to prolong the current trade truce is "very close," and he anticipates meeting Chinese President Xi Jinping following the conclusion of the discussions, likely before year-end.