Iron Ore Extends Decline on Ample Supply

Iron ore futures declined to around CNY 685 per ton on Monday, pulling back from four-week highs as production restrictions in China, driven by environmental concerns, dampened demand prospects for the key steelmaking ingredient. Authorities in northern China, including major steelmaking centers Tangshan and Handan in Hebei province, introduced emergency measures effective Monday in response to forecasts of severe air pollution. Industry data also showed that average hot metal production among Chinese steelmakers, a key indicator of iron ore consumption, fell for a fourth consecutive week, declining 0.5% from the previous week to 2.31 million tons as of November 5. Meanwhile, expectations of ample global supply of the metal continued to weigh on the market, with combined production from 16 major mining companies increasing by approximately 22.98 million tons year-on-year during the first three quarters of 2026.

Iron ore futures advanced toward CNY 690 per ton, reaching their highest levels in four weeks as improving profit margins boosted market sentiment. Industry data showed that the average margin on imported iron ore turned positive during the latest period, rising from -CNY 3.09 per ton to CNY 2.36 per ton, mainly supported by slightly lower freight costs and higher spot prices at Chinese ports. Steelmaking margins have also improved recently amid lower coke costs, strengthening expectations of increased hot metal production in the coming weeks. However, signs of abundant global supply continued to weigh on the market, with combined output from 16 major mining companies increasing by around 22.98 million tons YoY during the first three quarters of 2026. On the demand side, an industry survey found that 17 blast furnaces across China underwent maintenance in October, reducing daily hot metal production by about 57,100 tons, with most of the affected facilities located in North China.

Iron ore futures held below CNY 680 per ton, remaining close to four-year lows as increasing global supply continued to pressure the market. Industry data showed that shipments from major producers Australia and Brazil climbed 1.3% week-on-week to 27.9 million tons as of November 2, with miners boosting output to meet their quarterly and annual production targets. Meanwhile, demand in China, the world's largest iron ore consumer, remained subdued as steelmakers held back on restocking amid persistently weak profit margins, softer downstream steel demand and elevated inventory levels. Environmental restrictions imposed across several northern Chinese provinces also continued to constrain hot metal production. However, output is expected to rebound once these restrictions are lifted.