Iron ore prices dipped below $100 per ton, trading at $99.55 on the Singapore Exchange for 61% grade futures. This marks the first time prices have been under $100 since August of the previous year, and it represents the fourth consecutive weekly decline, the longest losing streak since June 2025.
The decline is primarily driven by persistently weak demand ahead of the Chinese Lunar New Year and an oversupply in the market. Inventories at major Chinese ports have escalated for ten consecutive weeks, reaching 160 million tons, a new high since 2022 and close to the historical peak of 2018. Steel mills are struggling with profitability, which has fallen to 62.3%, reducing their interest in purchasing raw materials like iron ore.
Contributing to the supply glut, Australian and Brazilian miners have ramped up production to meet fiscal year targets, with export levels from these countries remaining near a two-year high. Additionally, the Simandou iron ore project in Guinea is expected to increase production, further adding to the seaborne supply. Chinese crude steel output cuts further exacerbate the weak demand picture, as noted by Yu Wenxuan, an analyst at Mysteel consultancy, who stated, "The fundamental supply-demand dynamics of iron ore remain weak."
The significant drop in iron ore prices is a concern for miners globally, as it directly impacts their earnings and the broader market. The ongoing accumulation of supply and the tepid demand from the crucial Chinese market suggest continued pressure on prices, with the overall outlook remaining challenging for the iron ore sector.
