Iron ore futures rose above CNY 780 per ton, hitting a five-week high as the widening conflict in the Middle East threatened to disrupt global supply chains and drive up freight costs. The crisis has effectively shut the Strait of Hormuz, a crucial route for China’s steel exports to Gulf markets. The region has become China’s second-largest export destination, accounting for around 16% of its steel shipments last year.
Prices were further supported by Beijing’s pledge to bolster the steel industry by cutting excess capacity. Economic planners at the National People’s Congress signaled plans for a gradual, orderly reduction in steel production capacity, a policy that could lift steel prices and improve margins. In turn, this may underpin demand for steelmaking raw materials such as iron ore.
However, Chinese steel mills remain under pressure from persistent oversupply amid a prolonged downturn in the property sector, while export prospects are increasingly constrained by rising protectionist measures abroad.
