Iron Ore Slides Toward 1-Year Low

Iron ore futures fell below CNY 740 per ton, drifting toward their lowest levels in nearly a year as new European Union trade restrictions on steel imports clouded the demand outlook. The European Commission introduced quotas under a new system to curb duty-free steel imports into the EU, aiming to protect the region’s steel industry and boost capacity utilization. Meanwhile, global supply remained abundant, while iron ore inventories at Chinese ports stayed near historically high levels. Steel demand from China’s construction sector also remained subdued, while manufacturing-related demand continued to soften, a trend that could persist for months. At the same time, net steel exports have been unable to match the robust levels recorded during the same period last year.

Iron ore futures held below CNY 750 per ton, hovering near their lowest levels in almost a year as narrowing profit margins for steel mills and seasonal demand weakness weighed on sentiment. Industry data showed profitability among Chinese steel mills dropped to about 51% in the latest week, down 4.8 percentage points from the previous week and 8.2 percentage points from a year earlier. The margin squeeze followed a fatal coal-mining accident in Shanxi last month, which drove up coke prices and encouraged mills to use more medium-to-high-grade iron ore to improve efficiency. Iron ore has also remained under pressure in recent weeks due to seasonally softer demand, increasing seaborne supply, and still-elevated inventories at Chinese ports, with stockpiles reaching a record level for this time of year at 160 million tons.

Iron ore futures rose above CNY 740 per ton, rebounding modestly from near one-year lows as hot metal production showed a slight recovery, with output restarts at some steel mills helping offset blast furnace maintenance at others. Bargain hunting and short covering also lent support to prices as near-term demand in top consumer China remained relatively resilient. Lower prices encouraged buying activity among steelmakers and traders, with daily transaction volumes for seaborne cargoes increasing sharply in recent sessions. However, the market continued to face headwinds from expectations of higher exports by major suppliers and a subdued demand outlook. Mining firms are expected to boost shipments this month to meet production targets, coinciding with a seasonal slowdown in steel consumption.