Iron ore prices have fallen to their lowest level in over a year, with futures in Singapore dropping as much as 2.3% to $93.65 a ton, marking the lowest intraday price since early July 2025. Concurrently, the most-traded contract in Dalian saw a nearly 3% decline. This slump is attributed to existing market softness and a challenging demand outlook, exacerbated by concerns surrounding a significant physical trader of the commodity.
The market has been under pressure due to weakening fundamentals in the steel industry. Chinese mill margins have continued to decline, and hot metal production has decreased for the fourth consecutive week. Additionally, construction activity in China has fallen to its lowest point since the pandemic began, and factory output contracted in July for the first time in five months. Market sentiment was further impacted by reports that several major commodity trading houses, including Vitol Group and Cargill Inc., suspended new business with a leading iron ore trader over trade documentation concerns, leading to expectations of tighter credit conditions and higher margin requirements. However, traders noted no significant disruption to physical iron ore liquidity so far.
Iron ore futures on the Dalian Commodity Exchange fell to 698 yuan (approximately $103.3) per ton, their lowest in over a year. The broader steel market also saw declines, with rebar futures on the Shanghai Futures Exchange dropping 1.23% to 2,976 yuan ($441) per ton, and HRC futures falling 1.02% to 3,197 yuan ($473) per ton. These declines are driven by abundant seaborne supply, weak seasonal steel demand, and falling steel prices, with port inventories in China rising and strong shipments from major exporters contributing to elevated stock levels. Steel mills are limiting raw material purchases amid weak margins and subdued finished steel demand, with average losses at steel mills in Tangshan widening beyond 100 yuan per ton.
