Since the second half of 2025, the global iron ore market has exhibited key characteristics of shifting supply-demand dynamics. Shipments from major mining companies have gradually recovered, with port arrivals steadily climbing, while domestic end-demand remains persistently weak. Steel mills face significant profit compression from rising costs, causing iron ore prices to fluctuate widely at elevated levels. Entering December, port inventories reached a new high for the period. Steel mills' production cuts led to a decline in pig iron output. Combined with falling prices for coking coal, coke, and finished steel products, iron ore prices faced significant short-term downward pressure.

From a medium-to-long-term perspective, the iron ore supply-demand landscape is shifting from tightness to looseness. This structural change is primarily driven by capacity expansion on the supply side and sluggish demand growth. The price center is expected to face sustained downward pressure over the long term.

Global Major Mines Show Steady Production Growth

In Q1 2025, production at the four major mining companies remained relatively sluggish due to weather, resource constraints, and project timelines. As these factors subsided, supply continued to recover in Q2 and Q3. Cumulative output from these four companies reached 832 million tons in the first three quarters, marking a 2.45% year-on-year increase. Specifically: FMG produced 180 million tons, a significant 10.57% year-on-year increase; BHP saw a slight increase to 196 million tons; and Rio Tinto produced 210 million tons, a slight decrease from the previous quarter. The increase primarily came from the ramp-up of capacity at Vale's S11D project and FMG's Ironbridge project.

The fourth quarter marks the seasonal production peak for the four major miners. Assuming output remains consistent with the same period in 2024, their combined annual production would still increase by 37.19 million tons compared to last year, representing a 3.44% growth. Combined with Rio Tinto's West Hilt project (25 million tons capacity) reaching full production within the year, the projected annual production growth for 2025 is expected to exceed 4%.

From a long-term perspective, the global iron ore supply landscape is undergoing a transformation. In early December, the Simandou project—a joint venture between Rio Tinto and China's Baowu Steel Group—shipped its first ore cargo. As the world's largest and highest-grade undeveloped hematite deposit, it boasts a designed annual capacity of 120 million tons. Upon full operation, it is projected to account for 5% of global seaborne trade volume, with an average ore grade exceeding 65%. Production will ramp up in phases: shipments are projected to reach 2.5–3 million tons in 2025, followed by a production climb from 2026 to 2028 until full capacity is achieved. The Simandou project will significantly optimize the global supply structure for high-grade ore and profoundly reshape the existing market landscape.

China's iron ore imports in 2025 followed a pattern of “low in the first half, high in the latter half.” Supply disruptions from major mining companies caused imports to decline in the first half of the year. However, imports began to recover in June and have remained above 100 million tons per month for six consecutive months through November. Cumulative imports from January to November reached 1.139 billion tons, an increase of 15 million tons year-on-year. The import value totaled CNY 792.87 billion, a decrease of 8.17% year-on-year. Based on this, the average import price was calculated at CNY 696.11  per ton. Import sources remained highly concentrated in Australia and Brazil, with major mines retaining strong bargaining power.

To enhance domestic resource security, the government continues to promote domestic iron ore project development, though actual progress remains slow. From January to October 2025, cumulative domestic iron ore concentrate production totaled 852 million tons, down 19.8082 million tons or 3.2% year-on-year. Constrained by factors such as poor resource endowment, high production costs, and low industry concentration, domestically produced ore is primarily used as blending material and is unlikely to effectively substitute imported ore in the short term.

Steel Industry Chain Sees Opportunity for Profit Recovery

Since July 2025, iron ore prices have remained relatively resilient, fluctuating at elevated levels. Meanwhile, coking coal and coke prices peaked before declining, while finished steel products like rebar entered a downward price trend. According to relevant data, blast furnace profits for rebar plummeted from 282 RMB/ton in late July to -99 RMB/ton in early November, before rebounding slightly to 29 RMB/ton by December 15. During this period, the profitability rate of 247 steel mills nationwide also declined from 63.64% to 35.93%.

Industrial chain profits flowed through a “steel mills → dual coke → partial return to steel mills” cycle, while iron ore segment profits remained stable, continuing the long-term pattern of profit concentration at the upstream ore end. As the iron ore supply-demand landscape shifts toward greater ease, if the industry can advance capacity coordination, the profit distribution structure may adjust toward a more rational direction.

Traditional demand continues to weaken. From January to November 2025, national real estate development investment totaled CNY 7.86 trillion, down 15.9% year-on-year, with construction steel demand remaining sluggish. Daily transaction volumes of construction steel among major traders have fluctuated narrowly around 100,000 tons for an extended period, hitting a decade-long low. Growth in manufacturing and infrastructure investment also shows signs of slowing, failing to offset the gap caused by the real estate downturn. Data indicates that apparent crude steel consumption contracted month-on-month during the first ten months of this year, dropping to 61.1842 million tons in October—the lowest level since 2017. The seasonal patterns of “Golden March and Silver April” and “Golden September and Silver October” observed in previous years have significantly weakened.

Regarding exports, direct export growth has slowed, while indirect exports show promising signs but require further observation for sustainability. From January to November, China's cumulative steel exports reached 108 million tons, up 6.7% year-on-year. Billet exports from January to October totaled 11.9035 million tons, surging 157% year-on-year. As overseas rolling mill capacities become more established, future demand for billets may gradually narrow.

Weak demand and shrinking profits directly dampen steel mills' production enthusiasm. Data indicates that as of the week ending December 12, the operating rate of blast furnaces at 247 steel mills stood at 78.63%, down nearly 5 percentage points from late July. Daily pig iron output also declined from 2.4 million tons to 2.292 million tons, while daily imported ore consumption fell to a relatively low level of 593,400 tons.

Port inventories rise as downstream players actively reduce stockpiles

Inventory shifts vividly reflect the evolving supply-demand dynamics. Since August, imported iron ore inventories across 47 major Chinese ports have climbed steadily, reaching 161 million tons by December 12. This level not only surpasses the 142 million tons recorded in early August but also significantly exceeds the year-opening levels, marking the highest for this period since 2018. With major mining companies ramping up shipments toward year-end, port arrival pressures are intensifying, suggesting the inventory accumulation trend will persist.

Meanwhile, steel mills and traders are actively reducing inventories. During the week ending December 12, imported ore stocks at 247 steel mills fell to 88.342 million tons—the lowest for this period in five years. Facing slim profit margins and uncertain demand prospects, mills predominantly adopt low-inventory strategies, procuring only as needed, with minimal willingness to restock during winter. The stark contrast between high port inventories and low mill inventories reflects widespread caution across the supply chain regarding future market prospects.

Looking ahead, the iron ore market will enter a new phase of supply abundance. On the supply side, the gradual commissioning of major projects like Simandou will establish a tripolar global supply landscape. Starting in 2026, supply growth is projected to significantly outpace demand growth, exerting long-term downward pressure on price levels. On the demand side, domestic steel consumption recovery remains sluggish, with persistent downward pressure on real estate and limited traction from infrastructure and manufacturing. Policy has become the key variable influencing marginal demand shifts and industry profit distribution. Regarding inventory and profits, persistently high port inventories may become the norm, continuously suppressing price rebound potential. While profits may partially shift back from miners to steel mills, the smoothness of this transmission ultimately depends on steel mills' production cut intensity and supply-demand adjustment capabilities.

In summary, iron ore prices face downward pressure in the medium to long term, and the industry must adapt to a new normal characterized by ample supply, profit redistribution, and high inventory levels.

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