Iron Ore Stabilizes on Chinese Steel Mill Restocking Hopes

Iron ore futures climbed toward CNY 690 per ton, recovering some ground after hitting four-year lows last week, as expectations of restocking by Chinese steelmakers following an extended holiday provided support, although weak market fundamentals continued to limit gains. More mills are expected to return to the spot market this week to replenish raw material inventories and maintain production levels. Meanwhile, lower spot coke prices helped ease cost pressures and narrow steelmakers’ losses, potentially slowing the pace of production cuts. However, signs of rising global supply capped the upside, as miners increased shipments to meet quarterly and annual targets in the fourth quarter. Recent data also revealed that only 6.9% of Chinese steelmakers were profitable at the end of September, highlighting persistent challenges across the sector.

Iron ore futures dropped toward CNY 680 per ton, approaching their lowest levels since October 2022 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.