Iron ore futures slipped on Friday, extending their weekly losses as weak steel demand and continued production cuts in China weighed on sentiment. The market downturn reflects both seasonal softness and Beijing’s push to reduce overcapacity in the steel industry to curb deflationary pressures.
On the Dalian Commodity Exchange (DCE), the most-traded January iron ore contract fell 1.16% to 766 yuan ($107.54) per metric ton by 0202 GMT. The contract was set to end the week down nearly 3.95%. On the Singapore Exchange (SGX), the benchmark December contract dropped 1.79% to $102.05 a ton, bringing its total decline for the week to 3.9%.
Analysts say the weakness reflects a slowdown in downstream steel consumption across key sectors such as real estate, manufacturing, and infrastructure. Demand for steel has been gradually softening since midyear, with no clear signs of recovery heading into the fourth quarter. The government’s ongoing efforts to cut excess industrial capacity have further constrained production, limiting raw material demand.
According to data from SteelHome, blast furnace operations in North China have been scaled back as part of wider output controls, leading to reduced steel output in major producing regions. “China is actively addressing overcapacity to stabilize prices and improve profitability in heavy industries,” analysts at ANZ said in a note, adding that the measures, while supportive for the long term, are currently dampening raw material demand.
Market participants expect iron ore prices to remain under pressure through the coming weeks. A report by Galaxy Futures said steel demand weakened sequentially during the third quarter, with year-on-year declines across construction and manufacturing. “There has been little sign of improvement in the fourth quarter,” the report noted, suggesting prices are likely to stay bearish in the near term.
Globally, developments in Europe’s steel industry also drew attention. German Chancellor Friedrich Merz and Finance Minister Lars Klingbeil called for stronger “European patriotism” to protect domestic steel producers after the European Commission proposed reducing tariff-free import quotas by nearly half and doubling out-of-quota duties to 50%. The proposal is part of the EU’s efforts to protect its industrial base amid rising competition and higher energy costs.
Meanwhile, ArcelorMittal, the world’s second-largest steelmaker, reported stronger-than-expected third-quarter earnings and issued a cautiously optimistic outlook for 2026. However, the company noted that overall steel demand remains subdued and that restocking activity across major markets has yet to pick up.
Despite iron ore’s decline, other steelmaking inputs on the DCE posted modest gains. Coking coal rose 0.16%, and coke gained 0.11%. On the Shanghai Futures Exchange, most steel benchmarks recorded slight increases, with rebar up 0.43%, wire rod up 0.06%, and stainless steel inching 0.08% higher. Hot-rolled coil, however, slipped 0.06%.
Analysts say near-term support for iron ore will likely depend on China’s policy direction and the pace of industrial recovery. For now, sentiment remains cautious as traders weigh weak seasonal demand against hopes for stimulus measures to revive the construction and manufacturing sectors.
