Iron ore futures on the Singapore Exchange edged lower to $100.78/mt, declining 0.36% as weakening steel margins in China reduced demand for seaborne raw materials. The benchmark 62% Fe fines contract has traded in a narrow range this week as the market awaits clearer demand signals.
Chinese steel margins narrowed to CNY 180/mt, down CNY 40/mt from last week, as rebar prices declined faster than iron ore and coking coal costs. Margins are now below the three-year average of CNY 250/mt, discouraging mills from building ore inventories.
Port inventories of iron ore in China ticked up to 148 million tons, a 500,000-ton increase week-over-week, as mill buying slowed. The inventory level is 3% above the corresponding period last year, suggesting adequate near-term supply.
Australian and Brazilian shipments remain robust, with total seaborne supply running 4% ahead of the 2025 pace. Vale reported a 2.8% increase in Q2 production, while Rio Tinto maintained its full-year guidance of 345–350 million tons.
Demand-side concerns are centered on China's property sector, which remains in recession. Steel demand from construction is down 5% year-to-date, partially offset by growth in manufacturing, shipbuilding, and infrastructure.
Iron ore between $98–$102/mt reflects a balanced market. Chinese buyers are well-stocked, limiting upside, while seaborne supply growth caps the downside. Fix spot requirements at current levels but delay term commitments until clearer demand signals emerge from China's Q3 steel production.