Iron ore is headed for its steepest weekly loss since June, falling nearly 3% this week as steel mill margins deteriorate and hot metal output remains seasonally weak. Singapore futures dropped as low as $96.40 a ton on Friday, erasing a Tuesday rebound that had pushed prices to their highest close since June.

Weekly data from Mysteel showed only 7.8% of Chinese mills were profitable, down 22.5 percentage points from the previous week and 52.4 points from a year earlier — the lowest reading since September 2024. Persistently high coke prices continue to squeeze blast furnace margins. The China Iron and Steel Association last month urged steelmakers to voluntarily cut production to reduce inventories, but analysts see limited appetite for significant reductions as steel demand shows signs of stabilizing.

"Iron ore's recent weakness is largely driven by seasonally low hot metal output, a trend we expect to persist," said Mengtian Jiang, chief ferrous analyst at Horizon Insights. Jiang noted mills are reluctant to cut further as demand appears to be bottoming out. China Iron and Steel Association data showed average pig iron output at member companies at end-August was at its lowest for the season in two years, with Mysteel high-frequency data indicating a further weekly drop. Singapore iron ore fell 1.5% to $96.75 a ton, while Dalian yuan-priced futures dropped 2.1% and Shanghai steel contracts also declined.