SINGAPORE: Dalian iron ore futures prices ticked up on Friday but were on track for a weekly loss as traders assessed the consequences of a wave of production cuts across Chinese steelmakers amid the top consumer’s faltering steel market.

The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) ended morning trade 0.33% higher at 765 yuan ($105.78) a metric ton.

The contract has lost 1.92% so far this week. The benchmark September iron ore on the Singapore Exchange was 0.1% higher at $102.75 a ton, as of 0340 GMT.

It was set for a 0.69% gain week-on-week. 19 steelmakers across China were voluntarily undertaking equipment maintenance to cut production between late July and the end of August, leading to a total expected output decline of 1.98 million tons of construction steel, Chinese consultancy Mysteel said.

The production curbs come in the wake of unfavourable profit margins, ANZ analysts said in a note. As of July 25, the profit ratio among 247 Chinese blast-furnace steel mills had fallen to 15.15%, sliding 27.71 percentage points from the previous month, and marking the lowest percentage of profitable mills since mid-November 2022, added Mysteel.

The supply cuts will reduce iron ore demand, resulting in the build-up of an already elevated port inventory, the ANZ analysts said. Total iron ore stockpiles across ports in China climbed 1.47% week-on-week to 151.8 million tons as of July 26, Steelhome data showed. However, overall steel market sentiment will likely see some recovery, with reduced production helping to balance the Chinese steel market’s supply-demand dynamics, said the Price Monitor Center of China’s National Development and Reform Commission in a report.

Other steelmaking ingredients on the DCE lost ground, with coking coal and coke down 1.48% and 0.3%, respectively.

Steel benchmarks on the Shanghai Futures Exchange were mixed. Wire rod gained 0.36%, rebar edged 0.15% higher, while hot-rolled coil and stainless steel dipped about 0.2%