Iron Ore Extends Gains as China Targets Overcapacity

Iron ore futures climbed above CNY 793 per tonne on Tuesday, marking a third consecutive session of gains as China ramped up efforts to curb excess steel production capacity. Vale, one of the world’s largest iron ore producers, said China’s push to rationalize its steel industry could improve productivity and bolster long-term demand for iron ore. However, analysts warned that while Beijing’s policy focus on overcapacity remains in place, it is unlikely to mirror the sweeping supply-side reforms of 2016–2018, given current labor market weakness. Adding to the cautious sentiment, last week’s Politburo meeting failed to deliver meaningful stimulus, disappointing investors hoping for stronger measures to support growth and fight deflationary pressures. Markets also remained focused on whether the US-China tariff truce will be extended ahead of the August 12 deadline.