Iron Ore, Coal and Steel: SGX, Dalian, Newcastle — 2026-10-23
Iron ore futures hit four-year lows this week as China’s state buyer, China Mineral Resources Group (CMRG), signed a long-term supply deal with Rio Tinto, signaling a shift in pricing power. Fortescue reported a 6% drop in quarterly shipments, while Vale’s CEO warned that 10% of global seaborne shipments are now unprofitable due to rising costs.
Iron Ore, Coal and Steel: SGX, Dalian, Newcastle — 2026-10-23
Top developments
China State Buyer Locks in Rio Tinto Deal, Pressuring Prices
On October 22, iron ore futures fell after China Mineral Resources Group (CMRG) finalized a new multi-year supply agreement with Rio Tinto. The contract covers the period from November 2026 through May 2028. This deal reinforces the centralization of iron ore purchasing in China, a move that has historically pressured spot prices by reducing leverage for individual miners. The news contributed to futures sliding toward four-year lows, with the most-traded contract on the Dalian Commodity Exchange falling below CNY 680 per ton.
Fortescue Shipments Fall 6% as Costs Rise
Australian miner Fortescue reported a 6% year-on-year decline in iron ore shipments for the first quarter of fiscal 2027, totaling 46.8 million tonnes, which missed market consensus. The company cited rising operational challenges, with hematite C1 costs surging 21% and realized prices dropping 10%. Fortescue warned that ongoing negotiations with CMRG could further impact operations, highlighting the tension between Australian producers and China’s centralized buying strategy.
Vale CEO: 10% of Global Shipments Unprofitable
Vale CEO Gustavo Pimenta stated that approximately 10% of global seaborne iron ore shipments are currently operating at a loss due to elevated energy and freight costs. Pimenta noted that about 15 million tonnes of capacity have been idled as a result. Despite the current downturn, Pimenta maintained a long-term balanced outlook, arguing that Simandou’s ramp-up and Vale’s low-alumina ore will remain valuable even as China’s steel demand structurally declines.
Steel Margins Thin, Import Profitability Narrows
Chinese steel mill margins remain thin, dampening demand prospects for raw materials. According to Shanghai Metals Market (SMM) data, the import margin for iron ore narrowed to 9.62 yuan per ton, down from 11.52 yuan per ton, as weaker spot prices offset higher brand premiums. This squeeze is forcing mills to buy strictly on an as-needed basis, capping upside potential for iron ore despite recent rebound attempts driven by dip-buying.
Local view
Fortescue Warns of Production Cuts Local Australian media, including the Sydney Morning Herald, reported that Fortescue is warning of potential production cuts by year-end if price talks with Beijing remain deadlocked. The article highlights the "firing line" status of Australian miners amid China’s aggressive procurement strategy.
SMM Analysis: Range-Bound Trade Shanghai Metals Market (SMM) analysis indicates that while hot metal output edged up slightly, high port inventories are capping iron ore prices. SMM expects range-bound trade in the near term as mills remain cautious, with blast furnace operating rates showing only marginal improvements.
Context & numbers
- Dalian Futures: The most-traded iron ore contract closed near CNY 673.5 per ton after touching multi-year lows, with recent sessions showing volatility between rebound attempts and new lows.
- Pilbara Ports Data: Iron ore exports via Port Hedland rose 4.9% month-on-month to 48.9 million tonnes in September 2026, with China receiving 40.96 million tonnes of that total.
- Global Supply: Weekly global iron ore shipments jumped by 3.89 million tonnes to 34.77 million tonnes, while arrivals at Chinese ports reached 28.35 million tonnes, signaling abundant supply.
- Steel Output: Global crude steel output edged lower by 0.2% in September 2026, reflecting continued softness in major producing regions.
On the radar
- CMRG Negotiations with BHP: Following the Rio Tinto deal, attention shifts to whether CMRG will secure similar long-term agreements with BHP, which could further pressure spot markets.
- Green Iron Push: Research from IEEFA argues that green iron is becoming an economic necessity for Australia, as iron ore export earnings are forecast to fall by AUD44 billion over five years due to structural declines in Chinese demand.
This content was collected, curated, and summarized entirely by AI — including how and what to gather. It may contain inaccuracies. Crew does not guarantee the accuracy of any information presented here. Always verify facts on your own before acting on them. Crew assumes no legal liability for any consequences arising from reliance on this content.
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