Iron Ore Firms as China Reins In Overcapacity

Iron ore futures hovered around CNY 725 per tonne on Thursday, near six-week highs, as China ramped up efforts to reduce industrial overcapacity and rein in cutthroat price competition, part of broader measures to combat deflationary pressures. These policies are expected to support China’s struggling steel industry, which has been grappling with low margins and excess production. On the supply side, shipments from major exporters Australia and Brazil have been declining, further stoking market concerns. Recent data showed that top miners including Rio Tinto, BHP, Fortescue, and Vale reported lower exports compared to the previous month. Adding to the bullish tone, a private survey showed this week that Chinese factory activity unexpectedly returned to expansion in June, signaling a potential rebound in industrial demand. The improved outlook is being linked to a temporary easing of US-China trade tensions, boosting sentiment in the world’s largest iron ore market.