Prices for iron ore cargoes with 62% iron content climbed to $107 per tonne in February, marking their highest level since October of last year. The surge was driven by a combination of supply concerns and shifting demand expectations as markets assessed the potential impact of US steel tariffs on global trade.
Iron tops $107 per tonne
US President Donald Trump followed through on his previous threats by imposing a 25% tariff on steel imports from all countries, a move that is expected to dampen feedstock demand from major steel-producing nations such as Brazil, Canada, Mexico, Japan, and South Korea. The new tariffs could weigh on steel exports to the US, potentially reducing raw material purchases from iron ore suppliers and creating uncertainty in the global supply chain.
Iron ore prices remained supported by ongoing supply disruptions in Australia
Despite these concerns, iron ore prices remained supported by ongoing supply disruptions in Australia, one of the world’s top iron ore exporters. Severe weather conditions, including cyclones, are threatening to disrupt shipments from key export hubs operated by mining giants BHP and Fortescue, forcing shippers to remain docked. These weather-related challenges add to an already constrained supply situation, as Rio Tinto reported lower-than-expected exports last month due to adverse weather affecting its ports and logistical issues with its rail network.
China's boost to economy also influenced market
Meanwhile, on the demand side, iron ore prices received further support from China’s efforts to boost economic activity. The Chinese government has signaled its commitment to aggressive fiscal stimulus, with policymakers pledging to widen the budget deficit and increase government borrowing to support infrastructure spending. These measures are expected to sustain demand for steel in China’s construction sector, helping to offset some of the negative impact of the US tariffs on global steel trade. Additionally, stronger domestic consumption in China could provide stability to iron ore markets, preventing a sharper decline in prices despite the shifting trade landscape.
Looking ahead, traders and market participants will closely monitor further developments in US trade policy, weather conditions affecting Australian exports, and China’s economic stimulus measures, all of which could have significant implications for the trajectory of iron ore prices in the coming months.
