Iron Ore, Coal and Steel: SGX, Dalian, Newcastle — 2026-10-17
Iron ore prices rebounded from a two-year low on October 16, driven by dip buying and improving steel margins in China, after hitting levels not seen since 2024. While Chinese steel mill profitability remains critically low at 8.23%, rising supply from Guinea’s Simandou project and ample port inventories continue to weigh on the long-term outlook. Australian exporters like Rio Tinto are benefiting from high fuel costs that disadvantage longer-shipping competitors, even as Fortescue’s shares hit multi-year lows.
Iron Ore, Coal and Steel: SGX, Dalian, Newcastle — 2026-10-17
Top developments
Iron ore rebounds from two-year low on dip buying
On October 16, iron ore prices recovered from a two-year low, with the most-traded Dalian Commodity Exchange (DCE) contract rising 0.22% to 673.5 yuan/mt and Singapore futures rebounding to US$90.85/tonne. The rebound was attributed to dip buying amid signs of improving steel margins and downstream consumption in China, following a three-session decline that saw prices slip below $90 for the first time since 2024. This volatility highlights the market's sensitivity to short-term sentiment shifts despite persistent structural oversupply concerns.
Chinese steel mill profitability hits critical low
Data from Mysteel on October 16 revealed that Chinese steel mill profitability plummeted to 8.23%, a stark decline that underscores the pressure on the demand side of the iron ore market. The low margins are primarily driven by weak downstream consumption and high raw material costs, leading to reduced hot metal production and increased blast furnace maintenance. This collapse in profitability directly impacts iron ore demand, as mills have less capacity to absorb higher prices or maintain high inventory levels.
Rio Tinto gains advantage from high fuel costs
Rio Tinto reported on October 14 that high global fuel costs are tilting the iron ore market in Australia's favor, as producers with longer shipping routes, such as those in Brazil and Guinea, are curbing marginal production. This geographic advantage has helped Rio Tinto maintain its export volumes to China, even as overall prices remain depressed. The shift in relative competitiveness supports Australian exporters' market share, although it does not necessarily translate to higher prices for the commodity itself due to overall weak demand.
Australian coking coal exports surge on Chinese demand
Australia's coking coal exports rose 12.4% year-on-year to 14 million tonnes in September 2026, driven by a more than doubling of Chinese purchases. China has become the largest market for Australian coking coal, offsetting steep declines in traditional buyers like India and Vietnam. This shift indicates a structural change in the global coal trade, with Chinese steel production needs increasingly met by Australian supply, impacting Newcastle thermal coal dynamics indirectly through port capacity and shipping logistics.
Local view
Shanghai Metals Market (SMM) analysts noted that hot metal production is hitting bottom in stages, with iron ore prices expected to stop falling and stabilize in the coming week. SMM data highlighted increased port inventories and reduced production as key factors, suggesting a potential floor is forming as mills adjust to lower margins. Meanwhile, Chinese futures commentary from Caixin Futures Research described the steel market as oscillating at low levels, with weak demand and insufficient drivers keeping supply and demand under pressure.
Context & numbers
- Iron Ore Prices: Dalian I2701 contract closed at 673.5 yuan/mt on Oct 16; Singapore futures rebounded to US$90.85/tonne after hitting a two-year low below $90 earlier in the week.
- Steel Mill Profitability: Chinese steel mill profitability rate fell to 8.23% as of Oct 16.
- Australian Exports: Iron ore shipments via Port Dampier rose 5.7% month-on-month to 13.53 million metric tonnes in September. Port Hedland exports to China were 40.96 million mt in September, up 7.8% from August.
- Indian Iron Ore Exports: India's iron ore and pellet exports dropped 67.2% to 0.7 million tonnes in September 2026, the lowest monthly volume in nearly four years.
- Fortescue Shares: Fortescue shares hit a fresh multi-year low of A$15.01, down 32% year-to-date, driven by weak iron ore prices and Chinese pressure on pricing negotiations.
On the radar
- Simandou Ramp-up: Analysts continue to monitor the supply ramp-up from Guinea's Simandou project, which is expected to add significant new tonnage to the global market in Q4, further pressuring prices.
- Q4 Supply Season: Increased supply from Brazil and Australia is anticipated in Q4, which could keep prices under pressure despite potential restocking by Chinese mills.
- Fortescue Negotiations: Ongoing negotiations between Fortescue and Chinese buyers are impacting sales volumes, with reports indicating that China's pressure tactics are hurting FMG's export performance.
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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