Iron ore plummets: prices may fall to $90 per ton

Iron ore prices have hit a two-year low, as China’s property sector curbs steel demand—potentially squeezing profits for the world’s largest mining companies. Since the start of this year, the price of this critical steelmaking raw material has plunged by more than one-third, wiping out approximately $100 billion in market value from the so-called “Big Four” iron ore producers—BHP, Rio Tinto, Vale, and Fortescue. Data shows iron ore prices delivered to Qingdao fell to $92.20 per ton—the lowest since November 2022—and slipped below the critical $100-per-ton threshold, beyond which high-cost production becomes unprofitable. “There is reason to believe iron ore prices could remain below $100 per ton in the near term,” analysts warn, adding that the industry faces a crisis—a “winter” longer, colder, and harsher than the market slumps of 2008 and 2015. Iron ore serves as the cash cow for global mining giants like BHP and Rio Tinto, fueling generous investor returns and providing a solid foundation for growth in other commodities such as copper and fertilizers. Weaker demand has cooled investor enthusiasm for iron ore, sending copper prices down nearly one-fifth from May’s record highs to around $9,100 per ton—further compounding the challenges facing major miners. However, mining giants’ operations in Australia and Brazil remain highly profitable even at $100-per-ton iron ore prices, thanks to their low production costs. Until recently, many executives appeared unconcerned about the slowdown in Chinese demand. China’s property sector has cut steel demand by 100 million tons—but this decline is offset by a 40-million-ton increase in steel demand driven by the energy transition between 2020 and 2023. That represents only a small fraction of last year’s global iron ore output of 1.9 billion tons. Analysts say large mining groups may impose discipline to prevent iron ore prices from falling too far. Shipments from Australia and Brazil have already begun slowing, with July data showing a sharp drop in export volumes. “Iron ore is a structurally sound industry, with global mining majors controlling their own supply chains. Just as OPEC won’t flood the oil market, they’ll simply slow down if the market doesn’t want their tons.” Yet the continued collapse of China’s property market—and its ripple effects on steel and iron ore consumption—has alarmed many investors, especially as new housing starts fell by one-quarter in the first half of this year after two years of double-digit contraction. With construction metals oversupplied, Chinese steel mills are currently operating at negative profit margins—pressuring them to cut output to support prices and ensure survival.

AI return concerns ease, Asian equities rise modestly, U.S. Treasury yields retreat, gold breaks above $4,200, iron ore falls for third consecutive week

On Friday, the latest revenue data from OpenAI provided market relief, easing recent sell-off pressure triggered by doubts over AI spending returns. Iron ore prices extended their decline, marking their third consecutive weekly drop; meanwhile, long-end U.S. Treasury yields edged lower, lifting gold and silver prices—spot gold broke above the $4,200-per-ounce mark. Asian equities rose 0.3% overall, and European index futures pointed to higher openings. U.S. equity futures also gained: S&P 500 futures rose 0.3%, and Nasdaq-100 futures rose 0.5%. According to Bloomberg, OpenAI expects its annualized revenue this year to reach or exceed $70 billion—addressing earlier skepticism that its annualized revenue was only around $50 billion—and boosting sentiment previously dampened by disappointing AI revenue figures. Spot gold rose more than 1.6% on the day to approximately $4,200 per ounce; spot silver rose 2.0% to $60.36 per ounce. The strength in precious metals was primarily driven by the retreat of long-end U.S. Treasury yields from over two-decade highs. Brent crude fell 1.2% to $102.95 per barrel after Trump stated the U.S. would not attack Iran before the November midterm elections. Josh Gilbert, Chief Asia-Pacific Analyst at eToro, said: “AI trading has been volatile for several weeks, compounded by U.S. Treasury yields at multi-year highs—tempering investor risk appetite. The upcoming earnings season will be a major test: companies that have invested the most capital in AI will tell the market whether they’re still willing to double down.” Japan’s Nikkei 225 was virtually unchanged from the previous day; South Korea’s stock market was closed today. S&P 500 futures rose 0.3%; Nasdaq-100 futures rose 0.5%. The U.S. Dollar Index fell 0.1%. The yield on the 10-year U.S. Treasury was little changed at 5.22%. Japan’s 10-year JGB yield fell 5.5 basis points to 3.025%. Spot gold rose more than 1.6% on the day to approximately $4,200 per ounce; spot silver rose 2.0% to $60.36 per ounce. Brent crude fell 1.2% to $102.95 per barrel; West Texas Intermediate (WTI) crude fell 1.3% to $90.27 per barrel. Iron ore: Supply expansion coupled with weak demand increases bearish signals Iron ore prices remain under sustained pressure. Singapore iron ore futures dipped 0.9% intraday on Friday, hitting their lowest level since September 2024 at $90.90 per ton; Dalian iron ore futures likewise hovered near two-year lows. Over the past three weeks, iron ore prices posted gains on just one trading day. In its weekly research report, Yong’an Futures analysts noted that iron ore pricing logic is shifting—from the prior combination of “high hot-metal output + freight cost support”—to a market increasingly dominated by supply growth, weakening demand, and rising inventories. The outlook for Q4 remains bearish.

Iron Ore Declines to Two-Year Low as Demand Outlook Weakens

5 days ago

Iron ore prices dropped to a two-year low due to weak steel demand and increased supply from major miners. Analysts predict sustained weakness through November as port stocks remain elevated.

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Iron Ore Declines to Two-Year Low as Demand Outlook Weakens

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