Iron ore futures prices eased on Friday, and were set for weekly losses as rising steel production in China despite sluggish demand put pressure on steel margins and iron ore input costs.

The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) TIO1! traded 0.71% lower at 770 yuan ($107.21) a metric ton, as of 0257 GMT.

The contract is down 0.84% so far this week.

The benchmark September iron ore (SZZFU5) on the Singapore Exchange was 0.32% lower at $100.85 a ton, and down 1.03% so far this week.

Fresh weekly onshore data released on Thursday indicated that some steel mills have begun increasing production of certain steel products, consistent with trends that we have observed over the past two weeks using daily thermal satellite imagery and readings, said Atilla Widnell, managing director at Navigate Commodities in Singapore.

As a result, higher steel output in a demand-weak environment is placing downward pressure on steel margins and input costs, including iron ore, Atilla added.

Meanwhile, total iron ore stockpiles across ports in China climbed 0.2% week-on-week to 138.5 million tons as of August 21, according to Mysteel data, adding further pressure to prices.

Elsewhere, China has requested dispute consultations at the World Trade Organisation over Canada’s surtaxes and quotas on steel and aluminium goods.

This follows Canadian Prime Minister Mark Carney’s announcement last month of a 25% tariff on steel imports from any country containing steel melted and poured in China before the end of July, as part of efforts to protect Canada’s domestic steel industry.

Other steelmaking ingredients on the DCE fell, with coking coal NYMEX:ACT1! and coke (DCJcv1) down 1.72% and 0.8%, respectively.

Steel benchmarks on the Shanghai Futures Exchange all lost ground. Rebar RBF1! dipped 0.32%, hot-rolled coil EHR1! eased 1%, wire rod (SWRcv1) fell 0.21% and stainless steel HRC1! edged down 0.62%.
Source: Reuters