Iron Ore Hits 2-Year Low

Iron ore futures dropped below CNY 700 per ton, reaching their lowest level since September 2024 as Chinese markets reopened after a week-long holiday, with weakening steel margins putting further pressure on prices. Industry data showed that just 6.9% of Chinese steelmakers were profitable by the end of September, while average daily hot metal output, a key indicator of iron ore demand, fell to a six-month low of 2.34 million tons. Reports also indicated that some Chinese steelmakers had begun or were planning equipment maintenance amid mounting losses, hurting the outlook for demand for raw materials such as iron ore. In other news, Australian iron ore miner Fortescue reported lower sales as a prolonged standoff with state-backed buyer China Mineral Resources Group over long-term supply agreements and pricing negotiations continued to weigh on activity.

Iron ore futures rose above CNY 700 per ton, recovering slightly from eight-week lows after data showed China’s manufacturing sector returned to growth in September, improving the demand outlook in the world’s largest metals consumer. China also introduced measures to direct lower-cost credit toward sectors including infrastructure and technology, while increasing support for homebuyers as part of efforts to strengthen economic growth. Meanwhile, investors prepared for China’s weeklong National Day holiday, which is expected to bring lower trading volumes and reduced economic activity during the period. The ferrous metals market also remains under pressure from weakening steel demand and deteriorating profitability among mills. The China Iron and Steel Association has called on steelmakers to cut production and reduce inventories to protect margins and curb excess supply. Chinese markets will be closed from October 1 to October 7.

Iron ore futures in China slipped to around CNY 700 per ton on Tuesday, hitting eight-week lows as ample global supply and weakening steel demand pressured the market. Industry data showed iron ore inventories at major Chinese ports increased last week, while overseas shipments have recovered to elevated seasonal levels, easing previous supply-side disruptions. Meanwhile, profitability at Chinese steel mills declined again last week, while average daily hot metal output also fell. The China Iron and Steel Association has urged mills to reduce production and draw down inventories to protect margins and limit excess supply. Separately, World Steel Association data showed global crude steel production fell 1.2% to 144.2 million tons in August from a year earlier. Elsewhere, industrial profits in China slowed in August as weak domestic demand outweighed strength in high-tech and AI-related manufacturing, further weighing on the overall demand outlook.