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[SMM Iron Ore] Coke price cuts fail to lift iron ore buying as prices stay low
DCE iron ore futures were quiet today with limited movement. The most-traded I2701 contract settled at 683 yuan/mt, down 0.07% from the previous session. Qingdao port spot prices fell 0-2 yuan/mt on average. Traders were less active and mills bought to cover immediate needs, with few enquiries. Market trading was thin.
On fundamentals, supply has eased slightly but the market remains comfortably supplied. With more blast furnace maintenance reported after the holiday, the market is broadly pessimistic on near-term iron ore demand, buying appetite is weak and prices have held at low levels. Notably, while the first round of coke price cuts has improved mill margins, it has yet to translate into additional iron ore buying given soft end-use demand. Iron ore demand is likely to stay low in the near term, leaving prices rangebound at low levels.
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Iron ore went into China's 8-day National Day holiday on the back foot. The Singapore Exchange (SGX) 61% Fe November contract fell 3.5% week on week to $92.80/t on 1 October. The Dalian Commodity Exchange (DCE) January 2027 contract fell 1.3% to 702.5 yuan/t on 30 September.
The weakness was mainly a Chinese demand and margin story. Member mills of the China Iron and Steel Association (CISA) averaged 1.92 mt a day of crude steel from 10 to 20 September, 7.3% lower year on year. The association urged mills to cut production further as port inventories climbed and profitability weakened.
Freight added to the pressure. Capesize rates eased on the C5 West Australia to Qingdao route, lowering the delivered cost floor. With Dalian closed for the holiday, Singapore futures are trading without Chinese participants. Thin liquidity can exaggerate moves, and our base case is that prices stay soft over the holiday.
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