Iron ore futures edged lower on Monday, signaling a cooling period for the global steelmaking feedstock. The downturn comes as Chinese port inventories continue to rise and domestic steel mills conclude their pre-holiday restocking cycles, leaving the market with limited upward momentum ahead of the Lunar New Year.
Monday data point
Iron ore weaker by US$3 a ton on the week to US$103.38 which is year-to-date -1.96% with a trading range of US#102.71 to US$109.09 a ton
In Rand terms iron ore is R1,678 a ton at current spot (16.23) and this has taken the shine off for iron ore exporters like… pic.twitter.com/LRNnXyzncp
— Smalltalkdaily Research (@smalltalkdaily) February 2, 2026
Key Market Movements
- Dalian Commodity Exchange (DCE): The most-traded May iron ore contract fell 0.63% to 788 yuan ($113.37) per metric ton.
- Singapore Exchange (SGX): Benchmark March iron ore declined 0.42% to $103.35 per ton.
- Secondary Ingredients: Coking coal and coke on the DCE dropped 0.98% and 1.44% respectively, reflecting a broad retreat in steelmaking inputs.
Rising Inventories and Cooling Demand
Data released by consultancy Steelhome indicates that iron ore inventories at major Chinese ports rose 1.16% week-on-week. This supply build-up coincides with the conclusion of the seasonal restocking phase. According to a note from the Shanghai Metals Market (SMM), approximately 80% of surveyed steel mills have completed their replenishment, suggesting that immediate demand for ore will remain suppressed through the holiday period.
Environmental Constraints and Production Cuts
The outlook for production remains cautious. Analysts noted that environmental protection restrictions in the Hebei province may force blast furnaces to cut back on hot metal production. Furthermore, finished steel products are accumulating at mills, raising concerns about high inventory levels if end-user demand does not rebound sharply after the festive break.
Conflicting Macroeconomic Indicators
The market is currently navigating mixed signals from the Chinese industrial sector:
- Official Data: An official survey on Saturday suggested factory activity faltered in January, hindered by weak domestic demand.
- Private-Sector Data: Conversely, a private survey released Monday indicated an expansion in factory activity, citing a rebound in export orders and accelerated output growth.
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Industry Outlook
“Support for steel prices will depend heavily on the velocity of activity resumption after the Lunar New Year,” stated analysts from Mysteel. “The market’s ability to ingest accumulated inventory post-holiday will be the primary indicator for price stability in late February.”
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