Iron ore futures have experienced gains following an announcement from China, the world’s largest purchaser of the steelmaking component, regarding a strategy to address overcapacity within its steel sector. The initiative aims to stabilise the industry and promote sustainable growth by controlling production levels.
According to ANZ, China’s Ministry of Industry and Information Technology intends to limit the annual growth of the steel sector’s added value to approximately 4 per cent in both 2026 and 2027. The plan explicitly forbids steel manufacturers from increasing their existing production capabilities. It also mandates that these companies expedite the removal of obsolete blast furnaces and converters, streamlining operations for efficiency.
ANZ strategists Brian Martin and Daniel Hynes noted that reduced crude steel output is expected to elevate steel prices, creating an environment conducive to rising iron ore prices. Furthermore, the analysts highlighted that iron ore benefits from decreased supply, tightening the market and further bolstering prices.
Iron ore futures on the Singapore Exchange were trading at approximately $US106 per tonne at the close of the session, reflecting the positive market response to China’s policy and ongoing supply considerations.
