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Shifts in supply quality and changing demand are driving significant transformation in the global iron ore market.
In response to these market dynamics, Fastmarkets introduced its Iron ore 61% Fe fines, CFR Qingdao index, in June 2025.
The index has been rapidly adopted by key market players ever since its launch, with the most recent uptake by a major iron ore miner and a major end user in China for January and February 2026 tern contract shipments, pointing to a broader change in how mid-grade iron ore is priced and valued.
This article explores the factors driving this shift, including the changing quality of Australian ores and China’s strategic influence on pricing. We will examine how Fastmarkets’ index is positioned to provide greater accuracy in a dynamic market and what this means for the future of iron ore trading.
Lower iron content of key mainstream Australian direct shipping ores is one of the key factors reshaping the market.
This development has already caused the price differences between major Australian mid-grade iron ore brands to change significantly from last year. Spot prices for these new mid-grade products are still adjusting, especially with swings in the ore quality of some Australian mid-grade sintering fines, according to traders and end-users in China.
Fastmarkets’ Iron ore 61% Fe fines, CFR Qingdao index is specifically designed to better track and reflect the spot price of mid-grade sinter fines in the CFR Qingdao market, aligning with the current quality of products being traded.
As China continues to accept higher silica and alumina levels in its blast furnaces to manage costs, market sources are also keenly watching the changing price differentials between major iron ore brands.
To help market participants navigate this, Fastmarkets has refined its Value-In-Use (VIU) calculations, allowing for more accurate valuation of silica, alumina and phosphorus.
Chinese demand is a major influence on iron ore prices. Before 2021, China’s iron ore imports and crude steel output saw strong growth, prompting major miners in Australia and Brazil to ramp up production to meet this demand.
While this demand is now tempering, the total supply of mid-grade iron ore fines from Australia is expected to remain stable or increase slightly in 2026 following quality adjustments.
Some may see the falling quality of Australian mid-grade sinter fines as a benefit for competing high-grade iron producers, but the reality is more complex.
Steelmaking margins remain under pressure due to a difficult macroeconomic climate, changing steel demand and the ample availability of cheap metallurgical coke, all of which influence a mill’s choice of ore.
In China, recent short-term stimulus is providing intermittent support to the market despite lower demand. Additionally, the easing of US-China trade tensions has also buoyed sentiment, though the effect has been largely priced in. Furthermore, the broader price outlook remains unclear, especially in the face of mixed market signals like China attempting more supportive macroeconomic policies and rising high-grade iron ore supply.
Global trade flows are also being impacted. Lower iron ore prices in China have reduced shipments from some higher-cost producers, such as those in India, Ukraine, Chile and Sweden. Major miners from Australia and Brazil are expected to maintain their market position due to their low production costs, making them highly competitive.
Another factor is the anticipated supply from Africa’s Simandou project. This project is heavily backed by Chinese investment, and is expected to bring large quantities of high-grade ore to China and other markets.
Alongside this, China is advancing its domestic production to improve its self-sufficiency. Government guidance aims to raise domestic concentrate output to 370 million tonnes this year. This domestic supply has already replaced a significant portion of imported high-grade pellet feed and pellets, especially for mills in northern China.
In response to these trends, Chinese steelmakers are adjusting their raw material strategies. Many are increasingly seeking the most economical blends to reduce costs. This has led to the dominance of mid-grade iron ore fines, with Fe content between 60-63%, in both China’s seaborne and portside markets.
Market participants have also observed increased trading of ores with high contaminant levels, such as Brazilian ores with silica up to 15% and Indian ores with alumina up to 7%.
These are attractive due to their significant discounts to 61% Fe or 62% Fe iron ore fines indices. A Shanghai-based trader noted that some high-grade suppliers are even blending their products to slightly lower specifications to align with market demand.
This reflects the persistent pressure on steel margins from weak downstream demand; steelmaking companies are prioritising cost efficiency over premium raw materials.
Most steel mills indicate they can adapt to changes in the quality of major Australian mid-grade fines, provided the price differentials adjust accordingly.
One mill source from South China explained: “In recent years, most steel mills don’t rely on one specific brand anymore… with increased capability of beneficiation and blending, mills are more flexible to adjust blends out of cost saving.”
For 2026, the broader outlook remains cautious despite temporary support from Chinese stimulus and seasonal restocking. Construction activity and real estate remain weak, limiting demand recovery.
Risks remain skewed to the downside if stimulus measures fail to broaden. A projected 46.6 Mt decline in crude steel output in H2 and muted property sector activity continue to cap upside. Brazil posted a record 186 Mt of iron ore exports in H1 2025, with shipments continuing strong into Q3.
Premiums also narrowed further in Q3 amid weak steel margins and cautious procurement.
More supply from west Africa is also slated to hit the market,; with two vessels from Simandou already on the water. This is combined with stronger-than-expected Brazilian exports, which will add incremental high-grade supply and cap any near-term premium expansion.
The iron ore industry is navigating a period of significant change in its pricing mechanisms and the Fastmarkets’ 61% Fe iron ore fines index, designed to align with the evolving quality of major mid-grade Australian fines, places it at the center of this transition.
Interested in finding out more about Fastmarkets’ iron ore price data? Download a free sample of the Fastmarkets steelmaking short-term forecast to get started.