Iron ore falls as China furnace maintenance dents demand

By Emily Ou Yong

SINGAPORE, Oct 14 (Reuters) - Iron ore futures fell on Wednesday as rising blast furnace maintenance in China dampened demand, while higher port inventories in Australia and Brazil pointed to ample supply.

The most-traded January iron ore contract on China's Dalian Commodity Exchange (DCE) closed morning trade 1.1% lower at 672 yuan ($100.43) a metric ton.

The benchmark November iron ore on the Singapore Exchange was trading 0.28% lower at $90.3 a ton.

Projected hot metal output losses from blast furnace maintenance rose 78,600 tons week-on-week to 1.9 million tons for the October 10-16 period, marking a third consecutive weekly increase and taking the cumulative rise since late September to more than 270,000 tons, data from Shanghai Metals Market showed.

Hot metal output is a gauge of iron ore demand.

Overall mill transactions remained limited, with purchases focused on immediate needs, analysts from Shanghai Metals Market said in a note.

Freight rates have also entered a downward trend, weakening cost support, and prices are likely to stay soft in the near term, the analysts said.

Iron ore inventories at seven major ports in Australia and Brazil rose 1.99 million tons to 12.58 million tons in the week ended October 11, rebounding to near the average level since the start of the year, data from consultancy Mysteel showed.

Subsequent arrivals are expected to stay at relatively high levels based on shipment projections, while lacklustre demand during the peak season is likely to keep ore prices fluctuating at low levels in the short term, analysts from GF Futures said in a note.

Rio Tinto RIO.AX said on Wednesday it was on track to release about $5 billion in capital by the end of 2026, after strong mine performance helped lift third-quarter iron ore sales from its Pilbara operations above market expectations.

Other steel-making ingredients on the DCE were weaker, with coking coal and coke down 1.06% and 0.98%, respectively.

Steel benchmarks on the Shanghai Futures Exchange were mixed. Rebar fell 0.42% and hot-rolled coil lost 0.49%, while stainless steel rose 0.52%.

($1 = 6.6913 Chinese yuan)