Iron ore futures are on track for their seventh straight weekly loss, marking the longest losing streak since February 2023. Singapore futures declined by as much as 1.7% to $96.85 a ton, reaching their lowest level since March 25, 2026. This prolonged downturn is primarily attributed to a surge in global supply coupled with persistently soft demand from China, the world's largest steel producer and iron ore importer.
The market continues to grapple with an oversupply of seaborne iron ore, which has been pushing prices down. Simultaneously, demand in China remains subdued. Recent data indicated that China's steel production contracted in May, and fixed-asset investment plummeted to levels not seen since the pandemic, highlighting significant headwinds for the Chinese economy. These factors collectively contribute to the bearish sentiment in the iron ore market.
Analysts at Macquarie Group Ltd. had previously maintained their forecast for iron ore to average $103 a ton for the year and $100 a ton in the third quarter. However, the current price action, which has seen iron ore sink below $100 a ton, suggests a more challenging environment than anticipated. The elevated freight costs that had supported the industry's cost floor at around $85 a ton are now less impactful, shifting focus back to fundamental supply and demand dynamics.
Earlier in June, iron ore had already fallen to a two-month low, with futures dipping to $102.50 a ton by June 4 and further to $100.85 a ton by June 5, indicating a consistent downward trend throughout the month. This persistent weakness reflects deepening concerns about the balance between plentiful supply and faltering demand, especially from the crucial Chinese market.
