FX.co ★ Iron Ore Extends Losses on China Demand Concerns

Iron ore futures fell to approximately CNY 693 per tonne on Thursday, reaching their lowest point in more than two months. This decline was triggered by signs of decreased demand in China, the world's leading consumer of the commodity, negatively impacting market sentiment. Adverse weather conditions have disrupted both construction and industrial activities; the southern regions are being hampered by heavy rainfall, while extreme heat is affecting operations in the north. Furthermore, steel production in China saw a 6.9% decrease in May, marking its first monthly drop in several months as Beijing steps up its efforts to curb excess capacity in the industry. This reduction in steel output indicates weakened demand for raw materials, further contributing to the decline in iron ore prices. Additionally, market sentiment was dampened by increasing geopolitical tensions, with reports indicating that the US might be preparing for a military strike on Iran. Concurrently, the US Federal Reserve maintained steady interest rates and conveyed a cautious outlook, cautioning that President Trump’s tariffs could potentially reignite inflation.