China: Iron ore spot prices increase by $1/t d-o-d as fuel, freight costs surge

• Steel mills remain cautious amid weak margins 
• Higher freight costs keep supply concerns in focus

Iron ore fines (Fe 61%) spot prices bumped up by $1/dmt d-o-d to $99/dmt CFR China on 3 September 2026. The increase came as futures prices recovered during the session, although market sentiment remained cautious amid ongoing geopolitical uncertainties. Mills continued to closely monitor supply-side developments, particularly as changes in availability and freight costs could influence the near-term price outlook.

Higher fuel and seaborne freight costs added to uncertainty in the physical market, with buyers and sellers assessing their impact on delivered costs and overall supply availability. Meanwhile, market attention remained focused on any possible change to CMRG’s advisory restricting Chinese mills from negotiating with low-grade alternatives of ore. No fresh developments were reported on the issue. In the meantime, alternative low-grade brands continued to meet part of the demand from buyers facing limited availability of Super Special Fines.

The futures market staged a recovery after the previous session’s decline, supported by reports of a sharp rise in seaborne freight rates alongside higher oil prices. The rebound provided a positive cue to the spot market, while improved procurement from steelmakers further supported prices. As per reports, mills have gradually increased their iron ore bookings, resulting in a slight rise in inventories as consumption showed some improvement. However, buying interest remained measured, with mills continuing to avoid aggressive procurement at higher price levels.

The recent recovery is likely to face resistance unless there is a clearer improvement in steel market fundamentals. 4th round of coke price hikes has further squeezed steelmakers’ margins, prompting mills to remain cautious with raw material purchases. Meanwhile, maintenance activities and production restrictions at some mills could limit iron ore consumption in the near term. Typhoon-related disruptions in certain local spots also temporarily affected regional market activity and weakened end-user steel demand, keeping the overall outlook mixed.

DCE iron ore futures remain supported

January 2027 iron ore futures on the Dalian Commodity Exchange (DCE) rose by RMB 2/tonne (t) ($0.3/t) d-o-d to RMB 719.5/t ($107/t) on 4 September. The continued firmness reflected expectations for near-term steel demand, keeping transactional activity optimistic.