LAUNCESTON: Iron ore remains a standout performer among major commodities this year as it holds above $100 a metric ton despite mounting signs that the steel sector in top importer China is softening.
The most-traded iron ore contract on the Singapore Exchange ended at $101.71 a ton on Wednesday, down from $102.74 at the prior close.
The rolling front-month contract has traded in a relatively narrow band this year, with a high of $107.81 a ton on February 12 and a low of $93.35 on July 1.
That stability in pricing is largely a reflection that imports by China, which buys about 75% of global seaborne volumes, have held up.
China’s imports were 592.2 million tons in the first half of the year, down 3% from the same period in 2024, according to customs data.
However, June arrivals were 105.95 million tons, the highest since December last year.
China’s July imports also look set to be above 100 million tons, with commodity analysts Kpler estimating 101.32 million tons.
The relative resilience of China’s iron ore imports appears to be the main reason that prices have been able to hold around the $100 level so far this year.
The question for the market is whether they can continue to hold that level given the signals being received from the rest of the iron ore and steel sectors.
China, which produces just over half of the world’s steel, saw output drop 9.2% in June from the same month in 2024 to 83.18 million tons.
This was also the lowest level of monthly production so far in 2025, and it led to output for the first half of 2025 declining 3% to 514.83 million tons.
The outlook for the second half of the year isn’t too rosy either, especially if annual steel production is to stay around the informal target of 1 billion tons, which has prevailed for the past five years.
At best, China’s steel output is unlikely to increase in the second half of this year from the first, and it may decline, especially if exports are lower as importing countries impose more duties on Chinese steel products.
Exports slipping
Exports of steel products dropped 8.5% to 9.68 million tons in June from May, although a strong start to the year meant shipments rose 9.2% in the first half to 58.15 million tons.
But the likelihood is that China’s steel exports are likely to ease in the second half, putting further pressure on the sector.
Given China’s economy is still battling to stabilise the property sector and its manufacturers face uncertainty over U.S. tariffs and intense domestic competition, it’s increasingly difficult to construct a bullish case for iron ore.
There is still some scope for iron ore inventories to increase, as port stockpiles monitored by consultants SteelHome ended at 131.05 million tons in the week to July 25, down from 151.8 million in the same week last year.
It’s also worth looking at iron ore demand outside of China, but this is also looking soft, with global seaborne imports dropping to 136.56 million tons in July, the lowest since April, according to Kpler data.
Europe’s seaborne iron ore imports are expected to fall to 6.53 million tons in July for a third straight monthly decline, according to Kpler.
Japan, the world’s second-largest iron ore importer, is a rare bright spot with July arrivals expected at a three-month high of 7.73 million tons.
However, South Korea, the third-largest importer, is forecast to import 4.71 million tons in July, which is the weakest since February 2017, according to Kpler data.
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