Key Highlights

  • Iron ore futures fell below CNY 750 per ton, a one-week low.
  • Blast furnace capacity utilization at surveyed steel mills slipped below 90% last week.
  • Mill profitability eased to around 37%.
  • China Mineral Resources Group barred some steel mills from taking delivery of two Fortescue iron ore products.

Iron ore futures fell below CNY 750 per ton, hitting a one-week low, as seasonal weakness in Chinese steel demand and narrowing mill margins weighed on sentiment, though tighter supply expectations helped limit losses.

What Happened

Persistent rainfall across southern China and extreme heat in the north continued to disrupt construction activity, dampening steel consumption.

Industry data also showed blast furnace capacity utilization at surveyed steel mills slipped below 90% last week, while mill profitability eased to around 37%. Elevated inventories and abundant physical supply across China added further pressure to prices.

Market Reaction

However, the state-backed China Mineral Resources Group has barred some steel mills from taking delivery of Fortescue's Super Special Fines and Fortune Fines, both lower-grade iron ore products, fueling concerns over near-term supply availability and helping to limit the extent of the price decline.

Outlook

The restriction on deliveries of Fortescue's lower-grade products introduces a supply-side offset to the seasonal demand weakness, and the interplay between these two forces is likely to remain a key driver for iron ore prices in the near term.

Why did iron ore futures fall below CNY 750 per ton?

Prices fell on seasonal weakness in Chinese steel demand, tied to weather disruptions to construction activity, along with elevated inventories and narrowing mill margins.

What action did China Mineral Resources Group take?

It barred some steel mills from taking delivery of Fortescue's Super Special Fines and Fortune Fines, both lower-grade iron ore products.

How is current steel mill profitability?

Mill profitability eased to around 37%, while blast furnace capacity utilization slipped below 90% last week.