Iron ore edges up to 712 yuan on Brazil supply risks

Iron ore futures rose slightly on Wednesday, September 23, continuing to stabilize after falling nearly 1% last week. Potential supply disruptions linked to El Niño in Brazil provided short-term support, countering downward pressure from weak profitability at Chinese steel mills.

The most-traded January iron ore contract on China's Dalian Commodity Exchange rose 0.07% to 712 yuan ($106.18) per metric ton. The October benchmark contract on the Singapore Exchange remained virtually flat at $96 per ton.

In Brazil, El Niño typically brings heavier rainfall than normal, which can disrupt rail transportation of ore and slow port loading operations, according to a Malaysia-based analyst. Analysts at ANZ Research noted that iron ore demand usually strengthens ahead of China's Golden Week holiday in October.

Earlier, prices faced pressure from robust supply outlooks, lower confidence in Chinese steel demand, and the acceleration of the Simandou project in Guinea, according to a report by BMI analysts. In China, the blast furnace operating rate across 247 steel mills fell 0.8 percentage point week-on-week to 82.32% as of September 22, while capacity utilization rose 0.5 percentage point to 89.23%, according to consultancy Mysteel.