Iron ore futures in China hovered around CNY 705 per tonne, stabilizing after touching a six-month low of CNY 690 last month, as persistent macroeconomic headwinds continued to cloud the outlook for the country’s construction and manufacturing sectors.
Iron ore holds near six-month low
Trading remained range-bound, with market participants cautious amid mixed signals from both demand-side fundamentals and policy developments. The latest NBS Manufacturing PMI fell to a 16-month low in April, driven by a steep decline in new export orders—the sharpest since 2022—reflecting weakening external demand under the weight of intensifying global trade tensions and soft consumer confidence abroad.
The subdued outlook is also being compounded by deepening concerns over China’s ailing property sector. Despite targeted support measures, home prices continued to trend downward, stoking fears that debt-laden developers could face a fresh wave of liquidity crises and forced asset sales. The risk of mass liquidations has cast a long shadow over future steel consumption, as residential and commercial real estate development remains one of the largest end-markets for iron ore and steel products in China. Any prolonged downturn in the sector could further undermine demand for iron ore, even as the steel industry remains under scrutiny for overcapacity and emissions.
Chinese impact on the market
In response, Chinese authorities have reiterated that structural overcapacity in steel production may require output cuts in 2025, a move that could significantly reduce the purchasing appetite of blast furnaces for raw materials like iron ore. However, so far, crude steel production has remained resilient, rising 3.6% year-on-year in March to 93 million tonnes, as mills maintained output in anticipation of potential stimulus and ahead of the traditional peak construction season.
Still, broader sentiment in the iron ore market has been partially supported by recent monetary policy actions. The People’s Bank of China cut several key interest rates in an attempt to cushion the slowing economy and stimulate lending, particularly to the private sector and infrastructure projects. While the easing measures have provided some short-term support to commodity prices, traders remain cautious about the sustainability of any rebound without more concrete fiscal stimulus or a turnaround in end-user demand.
Global effects
Globally, traders are also closely watching the evolution of US-China trade negotiations, which are set to resume later this month. Markets are on edge over whether fresh tariff announcements could further weigh on Chinese exports, industrial activity, and raw material imports. Meanwhile, other major iron ore producers such as Brazil and Australia have maintained steady export flows, helping to cap any significant price upside for now.
Looking ahead, iron ore prices are likely to remain sensitive to a combination of domestic policy decisions, the trajectory of China’s property market, and geopolitical developments, particularly related to trade. Until clearer signs of demand recovery emerge, any sustained price rally may be difficult to achieve.
