Since the beginning of May, the iron ore market has exhibited a price trend characterized by an initial rise followed by a decline—specifically, a pattern of volatile downward movement. At the start of the month, the market extended the bullish momentum observed in April; however, after reaching its monthly peak mid-month, prices began a gradual retreat. The downward trajectory accelerated in the latter part of the month, resulting in a distinct shift of the price center to a lower level compared to the previous month. According to price tracking data from SunSirs, as of the 29th, the SunSirs Iron Ore Price Index stood at 769.56 poinst—a month-on-month decline of 2.29%. Notably, the index hit its lowest point of the month—769.56 points—on the 29th, marking a total decline of 2.29%, as illustrated in the chart above.

Reviewing the iron ore market performance in May, prices this month exhibited a distinct pattern of being "strong early on, then weak." During the first ten days of the month, prices trended upward, driven by post-holiday inventory restocking, a recovery in steel mill profit margins, and a positive feedback loop. From the middle of the month onward, however—as the onset of the rainy season in southern regions dampened downstream demand and expectations of increased supply intensified—market sentiment shifted toward caution, causing iron ore prices to come under pressure and retreat. In the final ten days of the month, a synchronized decline across the entire "ferrous complex" accelerated the downward trajectory of iron ore prices. In terms of specific varieties, the price movements of domestically produced ore and imported ore were largely consistent, both displaying the characteristics of being "strong early on, then weak," accompanied by a cooling in both supply and demand dynamics.

Regarding inventory, as of May 29, the total inventory of imported iron ore across 45 major ports nationwide stood at 163.961 million tons, a month-on-month decrease of 46,800 tons. The daily average port throughput (outbound volume) was 3.2225 million tons, a week-on-week decrease of 24,100 tons, while the number of vessels currently at port remained steady at 119, unchanged from the previous week. The status of iron ore port inventories for the current week is illustrated in the figure above. Meanwhile, the aggregate inventory of imported iron ore held by steel mills nationwide totaled 88.3854 million tons, a week-on-week increase of 111,100 tons. Throughout May, port inventories continued to undergo destocking, though the momentum behind this reduction steadily weakened. As of May 22, the imported iron ore inventory across the 45 major ports stood at 164.0078 million tons—a month-on-month decrease of 1.0115 million tons—with a daily average port throughput of 3.2466 million tons. Although inventories have declined for several consecutive weeks, the magnitude of these declines has continued to narrow, and absolute inventory levels remain at historically high levels for this time of year. As of May 27, inventories across 47 ports reached 172 million tons—a year-on-year increase of 24.42 million tons—bringing the total inventory across the entire industry chain to 10.05% higher than that of the same period last year. Concurrently, imported iron ore inventories held by steel mills rose to 88.2743 million tons, a week-on-week increase of 505,900 tons. Under the dual pressures of anticipated supply growth and expected demand weakness, it is highly probable that port inventories will reverse their downward trend and begin to rise again from late May through June, thereby re-entering an accumulation phase.

On the supply side, as of May 25, the total global iron ore shipments for the previous week amounted to 38.024 million tons—a week-on-week increase of 5.969 million tons. Total shipments from Australia and Brazil reached 31.327 million tons, up 5.596 million tons from the previous week. Australian shipments totaled 22.046 million tons—an increase of 3.416 million tons—of which 18.531 million tons were destined for China, representing a week-on-week rise of 3.501 million tons. Brazilian shipments stood at 9.281 million tons, an increase of 2.18 million tons. Overall, shipments from both Australia and Brazil saw substantial growth last week. In May, global iron ore supply exhibited characteristics of "short-term disruption, medium-term abundance." During the first ten days of the month, influenced by factors such as heavy rains in Brazil, shipments from Australia and Brazil experienced a sharp temporary decline; for the week ending May 18, total global iron ore shipments fell to 28.594 million tons—a week-on-week decrease of 4.893 million tons—with Brazilian shipments plummeting by 4.173 million tons to just 4.687 million tons. However, this contraction was indicative of a short-term disruption rather than a trend reversal. As the month progressed into its latter half, clear signals of a supply-side recovery emerged. By May 28, global iron ore shipments had rebounded sharply to reach their highest level for this time of year; shipments from both Australia and Brazil saw significant increases, while shipments from "non-mainstream" sources also recorded a slight uptick. Against the backdrop of the rainy season in Australia and Brazil drawing to a close, mining companies pushing to boost output for their fiscal year-end targets, and non-mainstream mines continuing to ramp up production, global iron ore supply in May increased by over 10 million tons month-on-month, once again setting a new year-on-year high. Furthermore, the pace of shipments from the Simandou project continued to accelerate, with recent weekly shipment volumes approaching the one-million-ton mark. The cumulative global iron ore shipment volume has increased by 28.23 million tons compared to the same period last year, with the growth in shipments from non-mainstream mines accounting for over 24 million tons of that total.

Regarding demand, as of May 29, the operating rate of steel mills' blast furnaces stood at 84.14%, remaining flat week-on-week; the utilization rate of blast furnace ironmaking capacity was 90.35%, up 0.07% from the previous week; the profitability rate of steel mills was 62.34%, a decrease of 0.86% month-on-month; and the average daily output of hot metal was 2.41 million tons, an increase of 1,900 tons. Currently, the average daily consumption of imported iron ore by the sampled steel mills is 2.9643 million tons, an increase of 1,900 tons. Throughout May, demand for iron ore generally remained resilient, yet signs of marginal weakening have gradually become more frequent. As of May 22, the average daily hot metal output across 247 steel mills was 2.4081 million tons, an increase of 14,800 tons month-on-month; the blast furnace operating rate was 84.14%, up 0.62 percentage points; and the steel mill profitability rate stood at 63.2%. Steel mills have maintained a reasonably high level of production enthusiasm, thereby providing rigid demand support for iron ore. However, several indicators suggest that hot metal output is approaching a cyclical peak. First, in mid-May, the average daily pig iron output among key steel enterprises was 1.879 million tons—a 0.9% month-on-month decline—indicating a pullback in pig iron production. Second, domestic investment in infrastructure and manufacturing saw a significant month-on-month decline in April, and end-user demand for steel continued to weaken in May. Third, with the full onset of the plum rain season in southern China, demand for construction steel faces seasonal downward pressure. Fourth, in early May, steel product inventories held by key steel enterprises reached 16.88 million tons—a 9.4% increase from the previous ten-day period—suggesting that accumulating inventory pressure will likely dampen steel mills' willingness to produce. Galaxy Futures has explicitly stated that end-user demand for steel domestically continued to weaken in May, and there are few signs of an imminent recovery in demand.

Regarding scrap steel, the market in May generally followed a "rally-then-retreat" pattern; the overall price level drifted slightly lower compared to the beginning of the month, exhibiting a three-stage trajectory characterized by initial strength, subsequent stability, and a final shift toward weakness. Throughout May, the scrap steel market displayed this "strong-stable-weak" sequence, with a persistent shortage of tax invoices serving as the core structural constraint dominating the entire month. Scrap steel prices were collectively suppressed by a confluence of three factors: a synchronized weakening across the entire ferrous metals complex, a comparative disadvantage in cost-effectiveness relative to alternatives, and continued financial losses among electric arc furnace (EAF) operators. Looking ahead to June, the scrap steel market is expected to continue trading within a narrow, downward-leaning range, with downside risks outweighing potential upside opportunities. Whether the supply-demand balance remains loose—and whether prices can break out of their current sideways trading pattern—will ultimately depend on shifts in downstream demand and the extent to which profit margins for EAF producers recover.

In summary, analysts at SunSirs observe that the iron ore market in May shifted from a position of relative strength at the beginning of the month to a decline by the end. The entire "ferrous complex" sector weakened in unison, and the momentum of the positive feedback loop observed in the preceding period has clearly dissipated. Current ore prices are situated within a transitional window, shifting from a state of "strong fundamentals" to one of "weak expectations": although hot metal production remains at elevated levels, a triple pressure—comprising surging supply, peaking demand, and the impending inflection point for inventories—is rapidly intensifying. Looking ahead to June, with the onset of the traditional off-season for steel products, insufficient support from end-user demand, and the persistence of an ample supply landscape, iron ore prices are highly likely to continue their volatile, downward-leaning trajectory, with the price center of gravity shifting further lower.

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