Iron ore has given back nearly all of its May gains as Chinese steel demand weakness reasserted itself. The mid-May spike to $114.70/mt was driven by tighter spot availability and a brief pickup in pig iron output. By late June, the market had re-priced to $100, reflecting the underlying reality of record port inventories and weak steel demand.
Chinese port inventories tracked by SteelHome stood at roughly 160-161 Mt in late June, near the all-time high of 166 Mt reached in March 2026 and roughly 22-28% above mid-2025 lows. Elevated inventories, combined with just-in-time procurement by mills, are the key mechanism keeping prices under pressure. Any rally above $105 brings sellers out of inventory.
China's crude steel output remains weak. April 2026 production was 86.63 Mt, the lowest April since 2018 and down 2.8% year-on-year. January-April output was 331.12 Mt, down 4.1% year-on-year. The property sector — historically steel's largest consumer — remains in decline, with new starts and completions both down year-on-year. Infrastructure stimulus has provided partial offset but not enough to reverse the trend.
Seaborne supply is ample. Global seaborne iron ore flows rose roughly 3% year-on-year in 2025 to 1.7 Bt, with Australia and Brazil accounting for more than 78% of exports. This strong supply has carried into 2026. Australian major miners maintain unchanged production guidance, while Brazilian exports have normalized as weather disruptions eased.
The demand-supply balance points to continued pressure. Chinese steel exports fell 9.7% year-on-year in January-April 2026, reducing the outlet for Chinese steel and keeping more supply at home. The global steel demand picture is similarly weak outside of India and select Southeast Asian markets.
Iron ore buyers should expect the $95-105/mt range to persist through H2 2026. Record port inventories mean no urgency to buy forward — spot availability is abundant. The key support level is $90/mt, where Chinese domestic iron ore production becomes uneconomic and some seaborne supply is deferred. The key resistance is $110/mt, where port inventory sellers emerge. For steel mill procurement teams, the strategy is straightforward: buy spot for near-term needs, avoid accumulating inventory. The only variable that could change this picture is a meaningful Chinese stimulus package targeting infrastructure — monitor the Politburo meetings for any shift. India's steel demand growth is a medium-term positive but not sufficient to move the global balance in 2026.