China: Iron ore spot prices hit 1-week low as higher coke costs squeeze mill margins

• Maintenance at steel mills weighs on iron ore demand
• Bearish futures sentiment extends iron ore price correction

Iron ore fines (Fe 61%) spot prices dropped by $1.85/dmt d-o-d to $97.7/dmt CFR China on 2 September 2026, hitting a one-week low and extending the correction following the sharp rally in late August. The decline was driven mainly by weaker buying interest as higher coking coal and coke costs continued to squeeze Chinese steelmakers’ margins.

Major coke producers proposed a fourth price increase on 1 September, further raising production costs and prompting mills to limit purchases of higher-priced iron ore. The combination of rising raw material costs and subdued steel margins weighed on procurement appetite.

Iron ore demand was also weighed down by ongoing maintenance at Chinese steel mills and a slower-than-expected recovery in end-user steel demand. Market sentiment remained bearish, with the derivatives market correcting sharply amid heightened geopolitical tensions in the Middle East and renewed concerns over inflation.

Meanwhile, procurement activity improved slightly from September 1, as higher portside trading volumes more than offset a clear deterioration in seaborne activity. However, the increase in spot buying was insufficient to provide meaningful support to prices.

DCE iron ore futures drop

January 2027 iron ore futures on the Dalian Commodity Exchange (DCE) declined by RMB 5/tonne (t) ($0.7/t) d-o-d to RMB 717.5/t ($106/t) on 3 September. The continued weakness reflected cautious buying interest and subdued expectations for near-term steel demand, keeping transactional activity under pressure.