Iron Ore Rebounds on Fresh Supply Concerns

Iron ore futures climbed to around CNY 715 per ton, recovering from 15-month lows as renewed concerns over potential supply disruptions resurfaced. A two-day strike is scheduled at BHP’s Port Hedland operations in Western Australia this weekend, despite progress in negotiations between the mining company and labor unions. The industrial action is expected to delay up to 16 iron ore shipments during the two-day period. BHP exports roughly $80 million worth of iron ore each day through Port Hedland, the world’s largest iron ore export terminal. Meanwhile, demand-side fundamentals remained weak, with a prolonged downturn in steel demand and deteriorating steel margins in top consumer China continuing to pressure the market. Hot metal production has fallen for several consecutive weeks as steel mills scale back output, while sluggish steel consumption has further reduced appetite for raw material purchases.

Iron ore futures slipped toward CNY 700 per ton in early August, falling to their lowest level since May 2025 as the lack of forceful policy support in top consumer China added to concerns over a structural downturn in steel demand. The Politburo recently stopped short of announcing major new stimulus measures, instead emphasizing the implementation of existing fiscal policies to support the slowing economy. Analysts said only targeted measures focused on infrastructure spending and selective industrial support are likely to provide meaningful relief for the market. Chinese steel margins have also continued to weaken, while hot metal output extended its decline as construction activity fell to its lowest level since the start of the pandemic. Meanwhile, private data showed China's manufacturing activity slowed to a four-month low in July as output and new orders expanded at a weaker pace, further weighing on the demand outlook.

Iron ore futures dropped to around CNY 720 per ton, reaching their lowest level since June 2025 as mounting losses among Chinese steelmakers weighed on the demand outlook for the key steelmaking ingredient. Industry data showed average losses at steel mills in Tangshan have widened beyond CNY 100 per ton and are expected to keep increasing, with the sector likely to remain under pressure next month. Investors also digested updates from the Politburo meeting in Beijing, where policymakers refrained from introducing major new stimulus measures and instead focused on implementing existing fiscal policies to support the slowing economy. Meanwhile, data from Australia showed that Western Australia’s Pilbara Ports, the world’s largest iron ore export hub, handled more than 800 million tons of cargo during the 2025-2026 financial year, with iron ore shipments reaching about 759.4 million tons.