Iron ore prices have stabilized near $101/mt as traders weigh expectations of additional Chinese stimulus against the reality of weak property demand and steel production controls. The market is in a holding pattern ahead of the PBOC's next policy announcement.
China's steel output fell to 92.8 million tons in May, down 2.1% month-on-month, as mills reduced production in response to thin margins. The government's policy of keeping annual steel output flat versus 2025 is encouraging production discipline, which limits iron ore demand.
Stimulus expectations have provided support for iron ore. The PBOC is expected to cut the reserve requirement ratio by 50 basis points in July, which would boost liquidity and support infrastructure spending. Additional fiscal measures for local government special bonds are also anticipated.
On the supply side, Brazilian iron ore exports to China reached 18.2 million tons in May, up 6.5% year-on-year, as Vale and other Brazilian miners expand market share. The higher-quality Brazilian ore commands a premium but also increases overall supply availability.
The spread between 65% Fe and 62% Fe grades has widened to $12/mt, reflecting demand for higher-grade material as Chinese mills seek to maximize steel output while minimizing raw material consumption per ton of steel.
The $98–$105 range is likely to persist through July. Chinese stimulus could provide a short-term boost, but structural demand weakness from the property sector limits sustained upside. Buyers should maintain normal inventory levels and avoid speculative stockpiling.