Iron Ore Drops to Near 1-Year Low

Iron ore futures dropped to CNY 738 per ton in June, the lowest since July 2025, pressured by expectations of higher exports from major suppliers and subdued demand. Mining companies are expected to increase shipments this month to meet their targets, coinciding with a seasonal slowdown in steel demand. This is likely to lead to a further build-up in port inventories, which are already at record highs. Additional downward pressure came from disappointing economic data in China, especially retail sales, which declined for the first time in more than three years, fueling concerns over weaker steel consumption in the months ahead. Iron ore were also undermined by a slump in crude oil prices, driven by signs of progress in US–Iran peace talks, which in turn reduced freight rates.

Iron ore futures dropped toward CNY 740 per ton, reaching their lowest level in four months as ample supply and weakening demand in China continued to weigh on the market. Crude steel production in China has stayed under pressure amid a prolonged downturn in the property sector, with May output declining 2.7% year-on-year to 84.35 million tons. Broader economic indicators also disappointed, with fixed-asset investment and consumer spending retreating to levels not seen since the pandemic period. On the supply side, Guinea’s Simandou mine continued to ramp up production, with output rising to 2.2 million tons in May from 1.3 million tons in April. Meanwhile, iron ore inventories at Chinese ports climbed to record highs as demand from steelmakers softened. Adding to bearish sentiment, China’s iron ore imports fell nearly 6% in May from the previous month, defying expectations for an increase, as mills limited purchases to immediate needs ahead of a seasonally weaker demand period.

Iron ore futures climbed toward CNY 770 per ton, recovering from near two-month lows as supply concerns emerged at Australia's key iron ore hub, Port Hedland, where an impending strike by BHP workers threatened to disrupt shipments. Two labor unions said a majority of members had voted in favor of industrial action that could begin within days, with workers seeking better pay and working conditions. Prices also drew support from easing Middle East tensions after the US and Iran reached an agreement to end the conflict and reopen the Strait of Hormuz. Meanwhile, industry data showed iron ore stockpiles at major Chinese ports increased to 160 million tons last week, pointing to abundant supply. China's iron ore imports fell nearly 6% in May from the previous month, contrary to expectations for a rise, as steelmakers kept purchases limited to near-term requirements ahead of a seasonally softer demand period.