Iron Ore Gains on China Stimulus Hopes, Tighter Supply

Iron ore futures advanced to around CNY 790 per ton, reaching a three-week high as rising costs linked to the Middle East conflict, particularly diesel and freight expenses, pushed the iron ore cost curve higher. Analysts, however, pointed to limited improvement in steel demand this year, even as top consumer China signaled that authorities will systematically address challenges from external shocks and strengthen energy security. Additionally, the prolonged downturn in China’s construction sector continues to weigh on overall metals demand. On the supply side, some Chinese steelmakers have been cleared to collect and trade cargoes from BHP Group that had accumulated at ports during an extended standoff. Those stockpiles were released after China’s state-backed buyer finalized negotiations with the miner, helping ease logistical bottlenecks.

Iron ore futures dropped below CNY 780 per ton, hitting a more than one-week low after some Chinese steelmakers were cleared to collect and trade cargoes from BHP Group that had built up at ports. The stockpiles had accumulated during a prolonged standoff, which was resolved after China’s state-backed buyer finalized negotiations with the miner. Last week, BHP confirmed it had secured a supply agreement with China Mineral Reserves Group, ending months of tensions that had led to shipment diversions, restrictions on its products, and elevated port inventories. Prices also came under pressure from demand concerns, as China steps up efforts to curb excess competition and industrial overcapacity. Meanwhile, markets continue to monitor developments in the Middle East, where stalled US–Iran negotiations have kept the Strait of Hormuz effectively closed, limiting access to a key export market for Chinese steel.

Iron ore futures held above CNY 780 per ton, staying near three-week highs as shipments from Australia and Brazil declined last week, leading to a drawdown in port inventories across China. Chinese steel mills have also been restocking ahead of the extended Labor Day holiday, providing additional support to prices. Meanwhile, reports indicated that Fortescue is nearing a supply agreement with China’s state-backed China Mineral Resources Corp, following a similar deal by BHP Group. Fortescue is currently operating under short-term contracts that have been extended while negotiations continue. Elsewhere, investors remain focused on developments in the Middle East amid stalled US–Iran peace talks, with the Strait of Hormuz still effectively closed, limiting access to a key export market for Chinese steel.