Iron ore futures traded in a narrow range on Friday, but were set for a weekly gain, supported by steady demand from top consumer China and falling inventories.

The most-traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) TIO1! closed daytime trade 0.77% higher at 787.5 yuan ($110.10) a metric ton, with a weekly gain of 2.3%.

The benchmark October iron ore (SZZFV5) on the Singapore Exchange was down 0.53% at $103.55 a ton, as of 0814 GMT, but has climbed 3% so far this week.

Demand for the key steelmaking ingredient stood firm despite production restrictions in Tangshan, China’s top steel production hub, to ensure better air quality for the military parade on September 3 to commemorate the end of World War Two.

Average daily hot metal output, a key indicator of iron ore demand, dipped by 0.3% week-on-week to 2.4 million tons, as of August 28, but remained 8.7% higher than the same period last year, according to data from consultancy Mysteel.

However, two analysts cautioned that output is likely to fall more steeply next week as the impact of the latest round of production controls takes hold, potentially putting downward pressure on prices.

A drop in portside stocks, which slid by 0.4% from the prior week as per Mysteel data, also supported ore prices.

Boosting sentiment was also news that China will push to cut steel production between 2025 and 2026, as it tackles overcapacity that has hit prices and fed a worldwide protectionist backlash.

Other steelmaking ingredients, coking coal NYMEX:ACT1! and coke (DCJcv1), dipped 0.13% and 0.87%, respectively.

Most steel benchmarks on the Shanghai Futures Exchange lost ground. Rebar RBF1! fell 0.83%, hot-rolled coil EHR1! dipped 0.21%, wire rod (SWRcv1) slid 0.69% while stainless steel HRC1! added 0.16%.
Source: Reuters