Seaborne iron ore prices have been dampened by mounting rumors of Chinese crude steel production cuts and concerns over China’s steel exports amid global trade tensions, resulting in Fastmarkets’ benchmark 62% Fe iron ore fines index dropping below $100 per tonne in April.
Fastmarkets’ iron ore 62% Fe fines, cfr Qingdao index fell to a 2025 low in April, to an average of just $99.49 per tonne, before bouncing back to $100.37 per tonne on May 13.
Tariff uncertainty, stimulus measures to shape sentiment
Sentiment in both the iron ore derivatives and physical markets has swung back and forth amid the swirling trade tensions between the world’s two biggest economies since the election of US president Donald Trump, yet positive expectations have begun to take center stage amid the latest round of China-US trade talks in May, sources said.
On Monday May 12, China and the US announced a 90-day pause in the trade war, resulting in the removal of all the additional import tariffs put in place since April 2.
US trade representative Jamieson Greer said the US has agreed to drop the 145% tax that Trump had imposed on Chinese goods in April to 30%. China has agreed to lower its tariff on US goods from 145% to 10%.
In response to Trump’s measures in April, China introduced a series monetary measure to bolster economic growth in early May, which quickly spurred bullish expectations.
The measures included China’s central bank lowering the reserve requirement ratio – which determines the amount of cash banks must hold in reserve – by 50 basis points from May 15 – a move that will inject an additional 1 trillion yuan ($138.74 billion) of liquidity into the market.
“But market expectations [on strong stimulus measures] continue to remain cautious, because the actual steel consumption will depend on the implementation of previous stimulus measures,” a Shanghai-based analyst told Fastmarkets. “And seasonal weakness in outdoor construction activity in the coming summer also needs to be taken into account.”
Production curbs spark pick-up in use of lower-Fe product
Sluggish steelmaking margins and ongoing process to decarbonization in China have led to continuous chatter about crude steel production cuts in 2025, which has dampened market expectations on iron ore demand amid cautious buying by the steel mills, sources said.
Some mills have maintained low iron ore stock levels due to the uncertainty over the implementation of production cut this year, despite there being no formal notice from the government about a timeframe or specific cut volumes.
China produced about 259.33 million tonnes of crude steel in the first quarter of 2025, down by 0.6% from the same period of last year, according to the latest data from National Bureau of Statistics.
“But the short rebound in iron ore prices on [May 13] was mainly driven by [an improvement in] sentiment, because the previous price drops were already reflected the bearish expectations on production cuts and most sources have recently grown tired [of that] narrative,” a Tianjin-based mill source said.
Some sources said that maintaining a blend of cost-effective iron ore brands without an additional requirement to raise hot metal output by using high-grade ore had also led to increased demand for lower-grade ore.
Prices for flagship low-grade iron ore fines from Australia were supported by firm demand from end users and from speculative buyers.
A cargo of 190,000 tonnes of 56.5% Fe Super Special Fines was traded at the June average of a 62% Fe iron ore fines index with a discount of 12.5% on May 8, laycan June 3-12 – narrowing from the miner’s initial May discount of 13.75% and April’s discount of 14.25%, sources told Fastmarkets.
Given the low benchmark 62% Fe iron ore price, in recent weeks, some miners in India have halted exports of Indian 54-57% Fe fines and 62-63% Fe pellet to China , while deals for low-grade fines and lump from Australia and Brazil have increased.
A cargo of 10,000 tonnes of 50.72% Fe lump ore unscreened Guaiba was traded at $80.30 per tonne CFR China (on a 62% Fe basis) on May 13, with a bill of lading dated May 2. And a similar cargo of 53.76% Fe was traded at $81.76 per tonne CFR China on May 9.
Trading in low-grade ore remained resilient in China’s portside market despite the recent price fluctuations, sources told Fastmarkets.
Market awaits mid-grade ore market restructuring
There has been a lot of chatter recently about a decline in the Fe content of mainstream mid-grade Australia iron ore fines in the second half of 2025, which might shape buyer brand preferences and result in prices changes for different mid-grade brands in China’s iron ore industry, sources told Fastmarkets in early May.
A cargo of 170,000 tonnes of 60.8% Fe Pilbara Blend fines, traded at $96.41 per tonne CFR Qingdao (61% Fe basis) on May 13, laycan July 2-11.
Some sources said that, given the uncertainty over China’s domestic and export steel demand amid global trade tensions, most mills were likely to prioritize cost-savings by blending different iron ore products.
A few sources said there might still be small brand premium mainstream Pilbara Blend (PB) fines despite the declining Fe content, due to the years of consistent use in Chinese mills’ sintering processes.
“It really depends on the quality and stability of the new PB fines coming into the market in the following months, as well as mill profits, to see how much premium mills can afford to pay for a new 61% Fe product,” a Beijing mill source said.
But other market participants said that most mills have not been relying on just one specific brand in sintering production in recent years and, on the contrary, are now skilled in blending and screening different iron ores to achieve the most cost-effective mix.
“There might be no big price difference or premium for one iron ore brand over another if their chemistry content is very similar, unless there is significant supply imbalance,” a mill source from South China said, “but most mills always have preferred cost-effective iron ores in recent years,”
Other market participants were adopting a wait-and-see attitude and expected to see more iron ore deals in the spot market, adding that they will assess mill usage feedback for the new PB fines before reshaping the pricing methods for different mid-grade iron ore brands.
In Fastmaket iron ore index methodology, all iron ore brands that are within the index specification range are used in calculations, including whatever price differentials between brands are being seen in the market, and Fastmarkets is seeking market feedback on whether to launch a new index for iron ore 61% Fe fines, CFR Qingdao, to better reflect the quality change in mid-grade ore sector.
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