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With Record Exports and Rising Steel Production, the Global Iron Ore Market Faces Strong Fluctuations and Uncertainties. China Adjusts Its Strategy as the Sector Debates the End of the Supercycle and the Impact on Future Prices.
China has put an end to the most intense cycle of iron ore appreciation, with prices in sharp decline amid a record global supply. The decline occurs amidst uncertainties about the future of the steel sector, in an international scenario of adjustments and moderate expectations.
On Tuesday (10), futures contracts for the commodity fell for the second consecutive trading session. The drop was softened by still solid demand from China, the world’s largest buyer.
On the Dalian exchange, the September contract dropped by 0.85%, ending the day priced at 698.5 yuan (US$ 97.16) per ton.
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In Singapore, the price was trading at US$ 94.10 in the early morning, after touching US$ 93.90 — the lowest price since June 3.
Record Supply of Ore Pressures Market
With shipments on the rise, pressure on prices is intensifying.
A survey by the consulting firm Mysteel indicates that Australia and Brazil increased their exports by nearly 2% in the week ending June 8, totaling 29.19 million tons — the highest weekly volume since December.
In detail, Australia accounted for 19.7 million tons, up 7.8%. BHP and Rio Tinto recorded jumps of 18.1% and 13.6%, respectively.
In Brazil, Vale slightly reduced its shipments, with a decline of 2.5%, totaling 6 million tons.
The Shanghai Metals Market estimates that the volume of imports by China is expected to grow throughout June. The reason is twofold: more competitive prices and the efforts of mining companies to meet quarterly goals.
Chinese Steelmaking Still Maintains Strong Pace
Despite the increase in supply, steel production remains strong.
Data shows that the so-called “hot metal” — molten iron in blast furnaces — reached an average daily rate of 2.42 million tons until the 5th. The result represents a 2.6% growth compared to the same period in 2024.
According to brokerage firm Hongyuan Futures, the profit margins of mills remain healthy, which supports production at high levels.
Still, the performance of imports is concerning. Between January and May, there was a 5.2% contraction, with 486.41 million tons purchased in total.
In May, China bought 98.13 million tons — below the expectation of 100 million.
Another declining indicator is port stocks, which fell by 2.8% to 133 million tons, the lowest level since February 2024.
Decline in Real Estate Sector and Exchange Rates Affect Commodities
While the industry remains vigorous, the construction sector is slowing down.
Forecasts indicate that housing prices in China may fall by up to 5% in 2025. The prospect of devaluation reduces the appetite for new ventures, directly impacting steel consumption.
Moreover, the recent strengthening of the dollar puts pressure on the prices of commodities quoted in the U.S. currency.
Even with the increase in global supply, analysts see a less imbalanced scenario than previously thought.
At the Singapore International Ferrous Week conference, experts revised down the projected surplus of iron ore in 2025 — from 50 million tons to a range between 20 and 30 million. The revision occurred after positive surprises in demand and disruptions caused by cyclones in Australia.
The opening of the Simandou mine in Guinea, scheduled for November, could add 120 million tons annually to global supply. However, political and infrastructure issues still cast uncertainties on the project timeline.
Price Projections and Impact on Brazil
Projections for the remainder of 2025 remain cautious.
For UBS, the average price is expected to be US$ 100 per ton, with a floor of US$ 85. Meanwhile, Trading Economics projects a quote of US$ 96.22 by the end of the quarter.
In Brazil, the decline in iron ore may have significant repercussions.
With an economic model still heavily tied to mining and commodity exports, the country may suffer from a reduction in revenue and in generating income for states and companies in the sector.
Furthermore, the weakening global demand for steel may impact infrastructure projects, industrial production, and trade balance.
China’s Stimuli and New Commodity Cycle
In an attempt to revive the economy, the Chinese government announced in May cuts in the benchmark interest rate and liquidity injection measures.
It is still unclear whether these actions will have a direct impact on the metallic commodities market.
Studies by the Financial Times suggest that the previous supercycle, driven by a rapidly urbanizing China, has come to an end.
The next cycle, according to analysts, will be marked by energy transition, focusing on strategic metals like nickel, copper, and lithium.
Does Iron Ore Still Have Room for Recovery?
With supply rising, fluctuating demand, and new challenges on the horizon, will iron ore settle into a new lower plateau, or is there room for a strong recovery in the coming quarters?
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