Iron Ore Slips on Demand Concerns

Iron ore futures fell below CNY 760 per ton, retreating from one-month highs as seasonal weakness in Chinese steel demand and narrowing mill margins weighed on sentiment, though tighter supply expectations helped limit losses. Persistent rainfall across southern China and extreme heat in the north continued to disrupt construction activity, dampening steel consumption. Industry data also showed blast furnace capacity utilization at surveyed steel mills slipped below 90% last week, while mill profitability eased to around 37%. In addition, elevated inventories and abundant physical supply across China added further pressure to prices. However, the state-backed China Mineral Resources Group has barred some steel mills from taking delivery of Fortescue’s Super Special Fines and Fortune Fines, both lower-grade iron ore products, fueling concerns over near-term supply availability.

Iron ore futures held above CNY 760 per ton, hovering at one-month highs amid growing concerns over tightening global supplies. Australian mining giant BHP Group reported a 3% year-on-year decline in iron ore production to 68.1 million tons in the three months to June, as the company continued to prioritize expansion projects in copper and potash. A looming strike by BHP workers at its Port Hedland operations in Western Australia also raised the risk of further supply disruptions, with hundreds of employees set to walk off the job after wage negotiations broke down. However, Rio Tinto reported higher quarterly iron ore shipments, suggesting global supplies remain relatively ample. In China, the state-backed China Mineral Resources Group has barred some steel mills from taking delivery of Fortescue’s Super Special Fines and Fortune Fines, both lower-grade iron ore products, adding to concerns over near-term supply.

Iron ore futures climbed above CNY 760 per ton, reaching a one-month high as impending Chinese restrictions on selected Fortescue portside cargoes are expected to tighten domestic supply. China Mineral Resources Group, the state-backed commodity buyer, has reportedly informed some steel mills that beginning July 15 they will no longer be allowed to take delivery of Fortescue’s Super Special Fines and Fortune Fines, both lower-grade iron ore products. Separately, China established a new mining investment vehicle, Guangyan International Investment Co., to strengthen its control over overseas mineral resources. Meanwhile, customs data showed China’s iron ore imports rose 15% month-on-month to 112.69 million tons in June. At the same time, disruptions linked to the closure of the Strait of Hormuz have pushed up shipping and raw material input costs, increasing the cost of seaborne iron ore.