Iron Ore Extends Rally on Stronger Steel Prices

Iron ore futures rose above CNY 815 per ton, climbing toward their strongest levels since February last year and heading for a fourth consecutive weekly gain as firmer steel prices continued to support demand for the key steelmaking material. Analysts said stronger steel prices have improved profit margins for mills, encouraging greater iron ore purchasing activity. Prices were also supported by a continued decline in steel inventories, which have now fallen for seven straight weeks, signaling potential restocking demand for raw materials. On the supply side, Brazilian iron ore shipments increased to 34.57 million tons in April from 30.07 million tons a year earlier, highlighting ample global supply conditions. Meanwhile, mining operations resumed this week at two blocks of Guinea’s massive Simandou iron ore project, operated by a consortium led by Baowu Resources, after workers ended a strike.

Iron ore futures rose above CNY 810 per ton, reaching their highest level in more than a month, supported by strong buying in mainland China as trading resumed after the May Day holiday. Sentiment was further lifted by a continued drawdown in steel inventories, which have now declined for seven consecutive weeks, pointing to potential restocking demand for raw materials. On the macro front, China’s manufacturing PMI remained in expansion territory, while policymakers in Beijing continued efforts to stabilize the real estate sector, improving the broader economic outlook. In corporate developments, UK-based Cadence Minerals said DEV Mineração has obtained an Installation Licence from the environmental authority in Brazil’s Amapá state, enabling key refurbishment and construction activities at the Amapá Iron Ore Project, including preparations to restart the Azteca processing plant.

Iron ore futures climbed above 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. There will be no commodities trading in China until May 5 for the Labor Day holiday.