Iron Ore Gains on China Stimulus Hopes, Tighter Supply

Iron ore futures fell below CNY 770 per ton, reaching their lowest level in seven weeks as abundant global supply coincided with seasonally subdued demand in China. Demand from China’s steel sector weakened earlier than usual this year, pressured by persistent rainfall and the premature arrival of summer heat, which slowed construction activity. At the same time, shrinking profit margins left steelmakers less willing to build inventories of the steelmaking raw material. On the supply side, industry data showed shipments from Australia and Brazil remained close to a two-year high, while iron ore stockpiles at Chinese ports continued to stay elevated. Meanwhile, China Mineral Resources Group reportedly advised some domestic steel producers not to hold discussions with Fortescue regarding a new iron ore product, fueling speculation that a potential purchasing restriction may be under consideration.

Iron ore futures fell to around CNY 770 per ton, hitting seven-week lows as abundant global supplies continued to outweigh weakening demand. Industry data showed that shipments from Australia and Brazil remained near a two-year high, while iron ore inventories at Chinese ports stayed elevated, reinforcing concerns about oversupply. On the demand side, recent figures indicated that blast furnace utilization rates in China were steady, while steel mill profitability have declined, pointing to softer industry conditions. Adding to the pressure, the steel market entered its traditional seasonal slowdown earlier than usual this year, as persistent rainfall and an early onset of summer heat curtailed outdoor construction activity, weakening demand for steel products. Meanwhile, a fatal accident at a coal mine in China's Shanxi province is expected to disrupt near-term production, potentially raising input costs for steelmakers, power producers, and chemical manufacturers.

Iron ore futures steadied above CNY 780 per ton but remained on track for a monthly decline as abundant global supply continued to outpace weakening demand conditions. Industry data showed shipments from Australia and Brazil hovering near a two-year high, while iron ore inventories at Chinese ports stayed elevated. On the demand side, the latest figures showed blast furnace operating rates in China were unchanged from the previous week, while profitability among steel mills slipped to 62.3%. Meanwhile, a deadly accident at a steelmaking coal mine in China’s Shanxi province is expected to disrupt output in the near term, potentially increasing costs for steel producers, power generators and chemicals manufacturers. Separately, electrical workers at BHP’s Port Hedland bulk export terminal in Western Australia threatened to launch strike action before the end of the financial year on June 30, adding to concerns over potential supply disruptions.