By Ulf Bergman
Iron ore prices have experienced a modest renaissance since the beginning of August. The September futures listed on the Singapore Exchange (SGX) have gained around six per cent since the beginning of last month. Still, notwithstanding the recent gains, the contracts are trading nearly ten per cent below the levels recorded in mid-May. Despite levels remaining below the highs of the first half of the year, the recent recovery has resulted in prices being a few per cent higher than at the beginning of September last year. Seaborne iron ore exports grew by almost one per cent year-on-year during the first half of the year, but the positive momentum has been lost during the first two months of the second half.
Iron Ore Prices Recovering from a Low Base
After settling at 93.76 dollars per tonne, the lowest level in nearly thirteen months, at the beginning of August, the September SGX iron ore futures have been recovering some of the recent losses and are trading just below 100 dollars per tonne. The current price levels are approximately ten dollars below the high for the year, set in the middle of May. Still, even if the contracts have experienced some volatility since the beginning of the year, the trading interval is somewhat narrower than seen in recent years.
Concerns over economic growth persist, as high energy prices have weighed on the outlook for growth and demand. Also, there is no shortage of supplies, as operations in Guinea ramp up, adding to an already robust global production. As a result, prices remain modest compared with levels seen a few years ago. The recent rally has been supported by short-term supply concerns amid an Australian miners’ strike, but weak Chinese economic data sets have taken some of the edge off such considerations. Also, a weaker US dollar has provided additional upside for commodities denominated in the currency, as this makes them cheaper in many local currencies.
Despite moderate iron ore prices, China’s steel mills, a major consumer of the world’s exports, are struggling with profitability as low domestic supplies of metallurgical coal drive up the costs to produce steel. According to recent reports, the industry is likely to face a squeeze on profit margins during the remainder of the year. As a result, given China’s dominance among the importers of seaborne iron ore, iron ore demand could sail into headwinds in the coming months.
Second-half Seaborne Iron Ore Exports off to a Soft Start
Global seaborne volumes of iron ore were lower in July and August compared with the same months last year. According to data from Signal Ocean, the year-on-year decline during the former month was nearly half a per cent, while the latter saw export volumes slide by almost two per cent. This followed growth of 0.9 per cent during the first half of the year. Still, the loss of positive momentum was already evident in June, when the current downward trend began.
A closer look at the data for the world’s two leading exporters of iron ore, Australia and Brazil, reveals a mixed picture. In the case of Australia, exports of the steelmaking ingredient showed the usual seasonal weakness in July, but compared with the same month last year, the decline was somewhat larger. Exports totalled 77.2 million tonnes, 1.1 per cent less than a year ago. On the other hand, the rebound in August was stronger than in recent years, with a year-on-year growth of 4.1 per cent.
For Brazil, developments have been less positive over the past two months, with year-on-year growth negative both in July and August. Export volumes were 4.2 per cent lower in July and 11.1 per cent in August. Still, the latter reading reflected unusually strong export volumes in August 2025 but was broadly in line with levels recorded in 2023 and 2024.
For the newcomer, Guinea, July and August provided a mixed picture. While export volumes remain largely insignificant relative to global aggregate flows, the growth remains closely watched by the industry as operations ramp up. After a second consecutive monthly decline in July, exports jumped to 2.9 million tonnes in August, according to data from Signal Ocean. The reading was the highest so far, representing a month-on-month growth of 87 per cent. It was also nearly 21 per cent higher than the previous record set in May. August’s volume growth meant that iron ore shipments from Guinea accounted for nearly two per cent of the global aggregate during the past month.
Given that China receives around three-quarters of the seaborne iron ore, any changes in the country’s demand will have a sizeable impact on the overall market. Despite signs that the Chinese economy is facing headwinds, exports bound for the country’s ports rose by 3.6 per cent during the first half of the year compared with the same period last year. The positive narrative carried into July with a modest growth rate of 1.4 per cent. However, last month’s seasonal rebound was weaker than in 2025, with volumes 1.7 per cent lower. This, combined with Chinese steel exports on dry bulk vessels surging by nearly 44 per cent last month, suggests that Chinese demand for iron ore may face growing headwinds in the coming months.
Outlook for the Remainder of the Year
The slow start to the second half of the year for seaborne iron ore exports suggests that concerns over economic growth may have tempered demand. The lower volumes in recent months could also provide some limited support for prices in the short term. However, multiple factors will be at play over the coming months that could affect both demand and supply.
An unresolved labour dispute could affect operations in Australia’s Port Hedland and weigh on global iron ore supplies. In contrast, continued production growth at Simandou will likely set new monthly records for Guinean exports, providing additional supplies to the global market.
For demand, rising Chinese steel exports highlight weak domestic demand, and a profitability squeeze on the country’s steel producers could put pressure on exports bound for China’s ports. As pointed out in a recent Ocean Analytics article, Chinese economic data is a poor leading indicator of the country’s commodity imports; as in the past, rising Chinese steel exports may encounter a wall of protectionist measures, limiting the ability to shift unsold products to overseas markets.
Having said that, there is little to suggest that iron ore prices will rise significantly in the coming months. Hence, prices will remain at levels that will keep inventory building attractive, should Beijing deem it desirable. In other words, barring any major developments, current iron ore price levels should support seaborne volumes and prevent a major decline in the coming months.
Data source: Ocean Analytics