Iron ore futures dropped to around CNY 693 per tonne on Thursday, marking their lowest level in over two months, as signs of softening demand in top consumer China weighed on market sentiment. Adverse weather conditions have disrupted construction and industrial activity, with heavy rainfall limiting work in southern regions and extreme heat affecting northern operations.
Adding to the pressure, China’s steel output fell 6.9% in May—its first monthly decline in several months—as Beijing intensifies efforts to reduce excess capacity in the sector. The downturn in steel production signaled weaker demand for raw materials, further dragging down iron ore prices. Broader market sentiment was also dented by escalating geopolitical tensions, with reports suggesting the US may be preparing for a strike on Iran. Meanwhile, the US Federal Reserve held interest rates steady and signaled a cautious outlook, warning that President Trump’s tariffs could reaccelerate inflation.
