Iron ore prices hit 18-month low in China

Iron ore prices on the Dalian Commodity Exchange (DCE) reached an 18-month low, dropping 3.12% to 682.5 yuan (approximately US$101.84) per metric ton. This decline occurred on the first trading day following a week-long holiday in China, the world's primary consumer of the commodity.

The price drop is driven by weakening profit margins within the Chinese steel sector. According to data from Mysteel, only about 7% of Chinese steelmakers were operating profitably at the end of September. Consequently, some mills have begun or planned equipment maintenance to mitigate losses.

Demand indicators are also declining, with average daily hot metal production falling to a six-month low of 2.34 million tons. Analysts from First Futures noted that profitability remains under pressure while ore supply is expected to increase. Additionally, falling freight rates and decelerating energy prices have contributed to the downward pressure on iron ore valuations.