Iron Ore Set for Strong Weekly Gain

Iron ore futures climbed above CNY 810 per ton and were poised to gain more than 5% for the week, as state-backed China Mineral Resources Group extended its ban on iron ore from BHP Group for the second time in two weeks amid a contract dispute. The CMRG also notified mills that products including Newman fines and lumps and Mining Area C fines, would be placed in the same restricted category as BHP’s Jimblebar blend. Chinese mills rushed to move BHP ore from port stockpiles to plants ahead of any curbs. Over the past six months, China has gradually tightened restrictions on purchases of BHP iron ore as it negotiated the terms of its 2026 contract. Last September, Jimblebar brand purchases were banned, followed by Jinbao products in November. CMRG was established in 2022 to centralize iron ore procurement and secure better terms from major mining companies.

Iron ore futures climbed above CNY 790 per ton, reaching near two-month highs as the intensifying conflict in the Middle East began disrupting shipments of the key steelmaking ingredient. At least three cargoes of iron ore mined by the UK’s Anglo American Plc and two from Brazil’s Vale SA have had their destinations changed, according to ship-tracking analytics data. Steelmakers in the Middle East rely heavily on imports of premium iron ore for pellets used in direct reduced iron production, a crucial precursor in steelmaking, with Oman and Bahrain serving as the region’s main pellet producers. The diverted cargoes were redirected to East Asia, including China, Malaysia, and Vietnam. Shipping flows through the Strait of Hormuz remain effectively shut due to Iranian attacks on vessels. The narrow waterway has also served as a key route for China’s steel exports to the Gulf, which has become China’s second-largest export market.

Iron ore futures climbed above CNY 780 per ton, reaching a five-week high as the expanding Middle East conflict threatened to disrupt global supply chains and push freight costs higher. The crisis has effectively shut the Strait of Hormuz, a key route for China’s steel exports to the Gulf. The region has become China’s second-largest export market, accounting for about 16% of shipments last year. Prices were also supported by China’s pledge to support the steel sector by curbing excess capacity. Economic planners at the National People’s Congress signaled plans for orderly cuts to steel output capacity, a move that could lift steel prices and improve profit margins. This, in turn, may strengthen demand for steelmaking raw materials such as iron ore. Chinese steel mills, however, continue to face pressure from persistent oversupply amid a prolonged property sector downturn, while exports are increasingly constrained by protectionist measures abroad.