Iron ore falls toward 670 yuan a tonne, near four-year low
Key Facts
Iron ore futures fell toward 670 yuan a tonne on Monday, October 26, nearing their lowest levels in four years, according to Trading Economics. The source said weak profitability at Chinese steel mills had curbed demand expectations for the raw material. Prices are falling as blast furnace activity declines at a group of Chinese mills, alongside abundant supply and higher shipments. This brings together pressure from weaker expected demand and large volumes of ore available in the market. Attention now turns to October factory activity data due on October 31.
The blast furnace operating rate at 247 Chinese steel mills was 80% in the previous week, according to data cited by Trading Economics. The rate was 4.3% below its level in the same period last year. The decline reflects a slower pace of operations at mills that consume iron ore, while their weaker profitability dims demand expectations for the raw material. These figures provide a weekly gauge of factory activity at a time when the official manufacturing index for September remained above the expansion threshold. The two indicators do not cover the same period: the furnace data measure the previous week, while the official index reading dates to September.
On the supply side, Trading Economics said conditions remained abundant, with iron ore arrivals at Chinese ports rising and global shipments increasing. The flow of ore into ports adds available volumes for buyers in China, the largest market tracked in the report, while global shipments support ample supply. State-owned China Mineral Resources Group, known as CMRG, also signed a new supply agreement with Rio Tinto. Details of the agreement were not announced, but the group verbally informed several steel mills of it in the previous week, according to the source. The agreement comes as market data point to abundant supply coinciding with weak producer profitability.
Data from China’s National Bureau of Statistics showed the official manufacturing purchasing managers’ index rose to 50.1% in September, up 0.3 percentage points from August, entering expansion territory. The new orders index, however, was 50.5%, down 0.1 percentage points from the previous month while remaining above the 50 threshold. The production index stood at 51.7%, up 1.3 percentage points from August. The readings present a mixed picture of activity: improvement in the headline index and production, against a slight decline in new orders. The September reading does not erase more recent signals of weaker furnace operations and steel mill profitability.
In separate data released by China’s Ministry of Commerce on October 22, utilized foreign investment totaled 5488.1 billion yuan in January-September 2026, down 4.3% year on year. In September alone, utilized foreign investment rose 2.5% year on year, indicating a different direction for the month compared with the nine-month total. These figures concern foreign investment and do not directly measure iron ore consumption or steel production. They are part of the economic backdrop markets monitor when assessing China’s industrial activity. Steel mill indicators and supply remain direct factors in tracking the ore market.
From a longer-term perspective, BHP said in its outlook published in August that Chinese steel production had remained near 1 billion tonnes a year for seven consecutive years, despite continued weakness in the property market. The company forecast production would stay around that level for the rest of the decade, potentially supported by advanced manufacturing, digitalization, modern infrastructure and industrial development. The estimate places sustained high production in the context of shifting sources of demand, while leaving unchanged the current pressures highlighted by weak mill profitability and abundant ore. The October manufacturing purchasing managers’ index is due on October 31, 2026. The economic calendar page shows a forecast of 50.1, against a listed previous reading of 50.1; this is a market forecast, not a forecast from the National Bureau of Statistics.