Iron Ore Gains as Steel Mill Output Improves

Iron ore futures climbed above CNY 680 per ton, recovering from four-year lows amid signs of strengthening demand in top consumer China. Industry data showed that China’s average daily hot metal output, a key indicator of iron ore demand, increased by 3,700 tons to 2.36 million tons, marking a second consecutive weekly gain as blast furnaces resumed operations following maintenance. The operating rate of blast furnaces across surveyed mills also rose by 0.14 percentage points week-on-week to 87.3% as of October 28. Meanwhile, freight rates on both Australia-China and Brazil-China routes continued to rise, providing further support for iron ore prices. However, Chinese steel mills remain unprofitable, and domestic steel demand remains weak. Robust global iron ore production could also constrain further price gains.

Iron ore futures recovered to above CNY 670 a ton after touching a four-year low of CNY 664 on October 27, as the return of steelmaking capacity provided some support despite concerns over rising supply. Hot metal production, a key indicator of iron ore demand, fell by 89,900 tons week-on-week to 1.75 million tons in the week ending October 24, largely due to blast furnace maintenance. Output is expected to decline further before recovering as furnaces resume operations. However, the improvement in production may offer limited support to prices, as steel mills continue to operate at a loss and demand for steel remains weak. On the supply side, iron ore arrivals at Chinese ports are expected to rebound after weather disruptions caused by typhoons along the eastern coast reduced deliveries last week. Although global shipments eased slightly, they remained seasonally high, increasing the risk of port inventories rebuilding and keeping prices under pressure in the near term.

Iron ore futures declined toward CNY 660 per ton, hitting fresh four-year lows amid signs of abundant global supply and a deteriorating demand outlook. China is entering a seasonally weaker period for steel consumption, while elevated oil prices have heightened concerns about the broader global economic outlook. Deteriorating profitability among Chinese steelmakers has further weighed on demand expectations, with industry data showing that the blast furnace operating rate across 247 Chinese steel mills stood at 80% last week, down 4.3 percentage points from the same period a year earlier. On the supply side, shipments from four major iron ore producers, including Rio Tinto Group and BHP Group, are expected to increase by nearly 20 million tons in the fourth quarter, while Guinea’s Simandou mine continues to expand production.