Iron ore prices stabilized at $102.00/t for 62% Fe CFR China on Monday, recovering slightly after a sharp selloff earlier in the month. The DCE futures contract traded at 766 CNY/t, down approximately 6% over the past month but still 9% higher year-over-year, reflecting the broader volatility in Chinese steel markets.
Chinese steel demand is showing signs of seasonal weakness. Five major steel products' apparent consumption fell 3.1% week-over-week in early June, accelerating from a 0.5% decline the prior week. Seasonal construction slowdown has arrived earlier than usual due to heavy rain and early heat waves across southern China, reducing rebar and long products demand.
Portside iron ore inventories in China remain elevated at the highest levels since 2022, reducing mills' urgency to book new cargoes. Blast furnace operating rates were flat week-over-week, while mill profitability slipped to approximately 62%, below the 70%+ levels seen in Q1 2026. The inventory overhang and softening demand create a balanced-to-soft near-term pricing environment.
The medium-term outlook is more bearish. Deutsche Bank projects a $102/t average for 2026, broadly in line with current levels. However, consensus forecasts compiled by GMK Center suggest an average of $94/t, with major bank projections ranging from $85-100/t. The Simandou project in Guinea, expected to add 20-45 million tonnes of high-grade ore by 2026-2027, represents a significant supply-side risk to prices.
Iron ore markets are transitioning from structurally tight to balanced-to-surplus. For procurement teams, this favors a wait-and-see approach. Cover only near-term requirements at current $100-105/t levels and maintain flexibility to lock longer-term volumes if prices fall toward the $85-90/t consensus range. Monitor Chinese stimulus announcements as the primary upside risk.