Iron Ore Extends Gains on Supply Concerns

Iron ore futures climbed to around CNY 820 per ton, nearing their highest levels since February last year as disruptions linked to the Middle East conflict created a structural inventory shortfall in the market. Prices were further supported by rising ocean freight rates and higher energy costs stemming from the Iran war. When oil and gas prices surge, utilities tend to shift toward coal, tightening supply and lifting coal-linked prices. Industry data showed iron ore stockpiles at major Chinese ports fell by nearly 1% week-on-week as of March 20. Meanwhile, analysts cautioned that elevated raw material costs could squeeze steel mill margins, potentially weighing on iron ore demand. In Australia, weather-related disruptions in key iron ore hubs in the northeast added to supply concerns.

Iron ore futures climbed to around CNY 815 per ton, recovering losses from earlier in the week after China reimposed buying restrictions on BHP’s Jimblebar product, tightening available supply. Beijing also introduced a secondary ban on BHP’s Newman fines amid an ongoing dispute between state-backed China Mineral Resources Group and BHP Group over the 2026 supply contract. On the demand side, industry data showed average daily hot metal output rose by 38,000 metric tons week-on-week and is expected to increase further. However, upside in prices may remain capped as port inventories in China continue to build, driven by strong shipments from producers and persistently weak steel demand amid the country’s prolonged property sector downturn. China’s crude iron ore output increased 1.3% year-on-year to 161.64 million metric tons in the first two months of the year.

Iron ore futures held below CNY 810 per ton, coming under renewed pressure after China’s state-backed buyer eased restrictions on BHP’s Jimblebar cargoes already held at Chinese ports this week. The move was widely seen as a concession to steelmakers grappling with supply challenges amid the prolonged dispute between CMRG and BHP Group. Meanwhile, seaborne shipments remain banned, potentially tightening supply in the near term. Analysts also noted that supply continues to outpace demand, with end-user consumption staying weak, while elevated spot prices may limit transactions. Chinese steel output declined in January and February, with mills holding back on inventory builds due to uncertain demand prospects.