Iron Ore: Intensifying Game + Geopolitical Disruption, Iron Ore Surges

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Guangfa Futures Research License [2011] No. 1292

Xu Yidan Z0020017 March 13, 2026, Friday

Market Overview: Today, the main iron ore futures contract surged significantly, opening sharply higher during night trading and then weakening somewhat. As market sentiment fermented, intraday gains exceeded 3%. By the close, the main iron ore futures contract rose 2.33% from the previous trading day’s close, closing at 811.5 yuan/ton. In the spot market, port prices slightly increased compared to the previous day. Traders showed moderate purchasing enthusiasm, mainly driven by steel mills’ immediate needs, with fewer market transactions. PB powder quotes ranged from 810-815 yuan/wet ton, and super special grade at 680 yuan/wet ton.

US-Iran Conflict Alters Supply and Demand Expectations, Energy Prices Surge, Increasing Costs

Although Iran’s iron ore exports to China have declined year by year in recent years, reducing its impact on China, Iran remains one of the world’s major iron ore exporters. In 2024, Iran’s iron ore production was 67.65 million tons. According to the General Administration of Customs, China imported 5.697 million tons of iron ore from Iran in 2025, accounting for about 0.5% of China’s total iron ore imports.

Iran’s share in China’s iron ore imports is limited, but Oman is an important transit and processing region for Iranian iron ore. Considering the combined influence of Iran and Oman, approximately 20 million tons of global iron ore trade are affected, mainly involving pellet feed.

Iran is also the 10th largest crude steel producer globally. According to the World Steel Association, Iran’s crude steel production in January 2026 was strong, at 2.572 million tons, up 15% year-on-year. In 2025, Iran produced 31.8 million tons of crude steel, a 1.4% increase from 2024, with electric arc furnace steel accounting for 92%. The country’s steel production heavily relies on direct reduced iron (DRI), closely related to its iron ore supply structure, with pellets being the main supply. Iran is also a significant steel exporter, shipping 10.8 million tons in 2024, with a net export volume of 9 million tons.

Ongoing geopolitical conflicts will hinder Iran’s iron ore and steel exports. The Middle East is an important export destination for China’s steel. Although short-term exports may be affected, prolonged conflict could reduce Iran’s annual export expectations. In the medium to long term, high energy costs and limited Iranian steel export capacity may lead traditional importing countries, especially in East Asia and China, to increase steel procurement, boosting China’s steel export substitution prospects and revising iron ore supply and demand expectations.

Additionally, the conflict has driven international oil prices sharply higher, directly increasing shipping costs for iron ore. Rising energy prices also propagate through mining, transportation, and other production stages, causing a synchronized increase in extraction and shipping costs.

Liquidity Tightening in Some Mineral Types, Structural Contradictions Worsen

One of the core drivers of today’s iron ore price increase is the further tightening of liquidity in some mainstream iron ore varieties, intensifying market structural contradictions. As of the latest data, inventories at Port 15—comprising Newman, Mac, and Jimblebar—total nearly 22 million tons, including 9.56 million tons of Jimblebar powder, 5.09 million tons of Mac powder, and 7.14 million tons of Newman powder and lumps. Port 15 inventories account for about 47% of the total port inventory of 75%. Newman and Mac are key sources of medium- and high-grade iron ore, and restricted liquidity in these sources supports spot prices while increasing import margins for other medium- and high-grade ores.

Steel Union data shows that from the beginning of the year to now, BHP’s iron ore shipments to China totaled 43.66 million tons, down 850,000 tons year-on-year. Compared to last year’s low base affected by hurricanes, BHP’s shipment growth this year is less than that of the other three major mines, but the reduction remains relatively limited. In 2025, BHP’s iron ore production is expected to reach 272 million tons, up 4.2% year-on-year, with sales of 289 million tons, a slight decrease of 0.1%. Over 80% of its iron ore exports go to China, which is its core market.

While the tightening liquidity of this supply short-term supports prices, it also poses risks. Once negotiations conclude, the release of frozen inventories could significantly impact the market.

Steel Mills’ Resumption of Production Boosts Demand Expectations; Peak Demand Still Needs Verification

Currently, domestic steel mills are in the process of resuming production. Over the past two weeks, due to localized environmental restrictions, pig iron output has declined noticeably. Some steel mills have begun to restart, and although pig iron production continued to decline this week, blast furnace utilization rates have slightly increased. As steel mills continue to resume operations, the pace of pig iron output recovery is expected to accelerate.

On the demand side, China is currently in a recovery phase. Domestic demand remains relatively weak, and exports are still a key variable supporting demand. However, due to the US-Iran conflict, short-term steel exports are likely to face disruptions. This week, SMM’s steel export orders and shipment data have not shown significant changes. Future terminal demand will determine pig iron output levels, and the sustainability of high pig iron production remains to be seen.

Overall, today’s sharp rise in the main iron ore futures contract is primarily driven by news. Recent bullish factors include: the US-Iran conflict causing global supply chain disruptions and potential substitution in domestic steel exports; Iran’s export restrictions leading to slower global iron ore supply growth; rising energy costs gradually passing through to shipping and mining costs. Additionally, liquidity constraints in main mineral types, combined with steel mill resumption, highlight structural contradictions in medium- and high-grade ores. Fundamentally, global iron ore shipments have decreased month-on-month, with notable declines in Brazil and non-mainstream mines, affected by rainfall in southeastern Brazil. Future shipments may pulse due to shifting routes, with some ships originally destined for the Middle East turning to China. Demand-wise, pig iron production continues to decline this week, with recent mill resumption slightly increasing utilization but still decreasing pig iron output. Next week, pig iron production is expected to gradually recover. Steel mill inventories have slightly decreased, port inventories slightly increased, influenced by reduced port throughput and downstream steel mill restocking and port clearance. The inventory build-up at ports has narrowed. Future port throughput and arrivals may both increase, potentially shifting the iron ore market toward destocking. Looking ahead, under geopolitical shocks and liquidity tightening in some mineral types, spot iron ore prices are expected to remain firm, with short-term main contract prices oscillating around 780-850 yuan/ton.