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Iron ore exports record high, but demand uncertain

Iron ore futures dipped on Thursday, as investors weighed a shaky demand outlook with efforts to reduce overcapacity. Brazil's record exports also impacted the market.

As of 0313 GMT, the most traded September iron ore contract at China's Dalian Commodity Exchange was down by 0.25% to 793 yuan (US$110.45) per metric ton.

The benchmark iron ore for September on the Singapore Exchange fell 0.05% to $101.75 per ton.

Analysts from ANZ said that "Iron ore prices fell as investors weighed a murky outlook for demand against efforts to reduce overcapacity, which could lead to an improvement in the economy."

Brazil exported 41.1 million tons of iron ore, a record. The surge was attributed to large projects in China as well as the resumption in domestic production.

According to Chinese consultancy Mysteel, the Chinese construction steel market will transition in August from a sentiment-driven trajectory to one based on fundamentals.

The firm noted that the recent optimism in the industry is fading and the demand-supply dynamic has returned to the forefront.

Hexun Futures, a broker, stated that the average daily hot metal output is still high and expected to remain strong in August. Meanwhile, improving steel mill profits continue support raw material prices.

A weaker dollar helped support iron ore prices, as the Federal Reserve's rate cut expectations grew amid growing concerns that partisanship was creeping into U.S. Institutions.

Dollar-denominated investments are more affordable for holders of currencies other than the dollar.

Coking coal and coke, which are used to make steel, have both gained in popularity, rising by 1.41% each.

The benchmarks for steel on the Shanghai Futures Exchange are mixed. The Shanghai Futures Exchange saw a mixed performance in steel benchmarks. $1 = 7.1800 Chinese yuan (Reporting and editing by Sonia Cheema).

(source: Reuters)