Iron ore futures prices rebounded on Tuesday, supported by resilient near-term demand in top consumer China, although caution triggered by U.S. President Donald Trump’s threat of higher tariffs capped gains.

The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) ended daytime trade 0.14% higher at 733 yuan ($102.21) a metric ton, after falling by nearly 0.7% on Monday.

The benchmark August iron ore (SZZFQ5) on the Singapore Exchange added 0.44% higher at $95.65 a ton, as of 0700 GMT.

Near-term consumption for iron ore remained firm, as reflected by the relatively high hot metal output that hovered at 2.41 million tons as of July 3, an annual rise of 0.6%, according to data from consultancy Mysteel. Hot metal output levels are typically used to gauge iron ore demand.

This has underpinned prices of the key steelmaking ingredient, said analysts.

Also, supporting price was falling portside iron ore inventory which declined 0.4% from the week before to 144.04 million tons as of July 7, Mysteel data showed.

However, price gains were limited by the resuming trade tensions worldwide.

Trump on Monday began telling trade partners – from powerhouse suppliers such as Japan and South Korea to minor players – that sharply higher U.S. tariffs will start August 1, marking a new phase in the trade war he launched earlier this year.

Other steelmaking ingredients on the DCE advanced, with coking coal NYMEX:ACT1! and coke (DCJcv1) up 0.84% and 0.14%, respectively.

Steel benchmarks on the Shanghai Futures Exchange moved sideways. Rebar RBF1! dipped 0.13%, hot-rolled coil EHR1! nudged down 0.06%, wire rod (SWRcv1) added 0.18% and stainless steel HRC1! gained 0.32%.

“The (steel) market focus has shifted back to seasonally weak fundamentals after the wave of frenzy amid pledges of crackdown on price war receded,” said Zhuo Guiqiu, analyst at broker Jinrui Futures.

“But the downside room will likely be limited as there is no big conflict in supply and demand for now.”
Source: Reuters