China’s iron ore futures market delivered one of the clearest paradoxes of 2025. Futures prices remained resilient and ended the year higher despite weakening domestic steel demand and a gradual decline in crude steel output, highlighting a market driven less by immediate fundamentals and more by policy signalling, production inertia, stockpiling behaviour and strong export flows.
Iron ore futures on the Dalian Commodity Exchange, based on the most-traded contract, traded within a wide range throughout the year and ultimately closed 2025 at 789.5 yuan per ton, posting a 1.35pct annual gain compared with the morning close on December 31, 2024.
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This resilience contrasted sharply with conditions in China’s steel sector. Domestic steel demand remained under pressure, weighed down primarily by the prolonged downturn in the property market, while manufacturing and infrastructure activity provided only limited support. Finished steel prices stayed weak for much of the year, keeping mill margins under pressure.
Despite this backdrop, Chinese steel mills maintained relatively high output levels for most of 2025. Crude steel production in January-November totalled 891.7 mln tons, down 4pct YoY, but the decline was gradual. Lower raw material costs earlier in the year helped support profitability, encouraging mills to prioritize utilization stability and cash flow. This output inertia sustained iron ore consumption and limited downside pressure on futures prices. Only in the final months of the year did production begin to ease more visibly, amid renewed calls for discipline and concerns over overcapacity.
Steel exports also played a key supporting role. China exported 107.7 mln tons of steel in January-November 2025, helping absorb domestic oversupply and allowing mills to maintain operating rates. While exports supported utilization, they did not restore pricing power, and competition in overseas markets continued to weigh on finished steel prices.
Iron ore imports into China increased despite weak domestic demand. January-November imports reached 1.139 billion tons, up 1.4pct YoY, placing full-year volumes on track for record highs. Port inventories rose steadily, reaching around 144 mln tons by mid-December, providing a physical buffer that underpinned futures prices. At the same time, ample seaborne supply and emerging new capacity, including projects such as Simandou, capped the durability of sentiment-driven rallies.
Throughout the year, iron ore futures remained highly responsive to policy-related headlines, with short-lived rallies repeatedly giving way to range-bound trading. Looking into 2026, high inventories, rising global supply and structural shifts in China’s steel sector are expected to limit upside potential, making futures prices increasingly sensitive to tangible improvements in underlying demand rather than policy optimism alone.
