SINGAPORE- Dalian iron ore futures prices climbed on Friday but were on track for a weekly loss as traders assessed the consequences of a wave of production cuts across Chinese steelmakers amid the top consumer’s faltering steel market.

The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) ended daytime trade 2.16 percent higher at 779 yuan ($108.09) a metric ton.

Still, the contract lost 0.13 percent this week.

The benchmark September iron ore on the Singapore Exchange was 1.41 percent higher at $104.1 a ton.
It posted a 0.69 percent gain week-on-week.

Ninteen steelmakers across China were voluntarily undertaking equipment maintenance to cut production between late July and the end of August, leading to a total expected output decline of 1.98 million tons of construction steel, Chinese consultancy Mysteel said.

The production curbs come in the wake of unfavorable profit margins, ANZ analysts said in a note.

The average sales profit margin of key Chinese steel enterprises in the first half of 2024 was 1.1 percent, down 0.03 percentage points year-on-year, while total profits were down 6.7 percent year-on-year, said consultancy Steelhome.

The supply cuts will reduce iron ore demand, the ANZ analysts said.

However, overall steel market sentiment will likely see some recovery, with reduced production helping to balance the Chinese steel market’s supply-demand dynamics, said the Price Monitor Center of China’s National Development and Reform Commission in a report. – Reuters