FX.co ★ Iron Ore Rises to 4-Week High

In the second week of September, iron ore futures in China climbed to CNY 790 per tonne, marking a four-week high. This upward trend emerged as market participants assessed the prospects for steel production in major Chinese steelmaking regions. Anticipating increased iron ore consumption by furnaces, some market actors adjusted their strategies accordingly. This shift followed the conclusion of China's military parade, leading authorities to potentially lift production halts, previously imposed to reduce pollution and ensure clear skies. Improved profit margins for steel producers have also influenced the market, as the Chinese government committed to decreasing capacity in the steel sector, aiming to curb deflationary pressures in manufacturing. Consequently, this encouraged ore miners to raise their prices. In August, iron ore imports increased to over 105 million tonnes, representing a 1.3% rise from the previous month. However, the demand outlook remained tepid due to continued pessimism in monetary aggregates, as well as the official construction PMI indicating the sector's first contraction since January.