Geopolitical tensions stemming from the US and Israel’s military operations against Iran have sent ripples across global commodity markets. Crude oil, refined fuels, LNG, coal, copper and aluminium have all seen sharp price swings, but iron ore — a key raw material for steel production — has stood out with remarkable price stability. A combination of shipping routes, supply-demand dynamics and rising logistics costs has shielded the commodity from market volatility.
The primary buffer lies in its trading lanes. The Strait of Hormuz, a vital Middle East shipping artery, has faced severe disruption amid the conflict. However, China, which accounts for around three-quarters of global seaborne iron ore purchases and produces more than half of the world’s steel, sources the vast majority of its supplies from Australia and Brazil, with smaller volumes coming from South Africa and Guinea. These shipping routes entirely bypass the Strait of Hormuz, eliminating major transit risks that have roiled energy commodities.
On the price front, Singapore Exchange iron ore futures have traded within a narrow $14 range this year, centering around $105 per metric ton. Prices climbed from $98.20 on February 20 to a peak of $111.91 on May 11, as traders worried about potential bunker fuel shortages. The rally later faded on easing supply concerns, with the contract settling at $101.65 per ton on June 10.
Fitch Ratings has revised its outlook amid shifting market conditions. The ratings agency lifted its near-term iron ore price forecast from $95 to $100 per ton, noting that Middle East tensions have pushed up fuel prices and global freight costs. Fitch added that higher transportation expenses have established a solid floor for iron ore prices, even amid lingering uncertainties over global economic growth and steel demand.
China’s import data reflects resilient underlying demand. The country imported 516.26 million tons of iron ore in the first five months of the year, up 6.3% year on year. That said, May arrivals fell 6% month on month to 97.71 million tons, hitting a three-month low. The official figure diverged notably from estimates by DBX Commodities and Kpler, which put May inflows at 105.56 million tons and 106.4 million tons respectively. Analysts attribute the gap to delayed customs recording for late-May cargoes, expecting official import data to rebound in June.
A clear divergence has emerged between iron ore inflows and steel output. China’s crude steel production dropped 4.1% year on year to 331.12 million tons in the first four months. The mismatch is partly explained by elevated port inventories. As of the week ending June 5, iron ore stockpiles stood at 159.09 million tons. Though down from the record high of 166.91 million tons in mid-March, the figure was still 21% higher than the same period last year.
Domestic production challenges further lift China’s reliance on overseas supplies. Domestic iron ore output slipped 1% year on year in the first four months, extending a decline seen in 2025. Local ore only carries an iron content of 20% to 30%, far lower than the 60% to 65% grade of imported material. Upgrading low-grade domestic ore also entails high costs and heavy energy consumption. Fitch pointed out that shrinking domestic output and inferior ore quality will continue to bolster import demand, offering long-term support to iron ore prices.
Overall, insulated shipping routes, steady import appetite, high port stocks and rising freight costs have kept iron ore prices steady amid widespread commodity volatility. Fitch warned that while freight costs will underpin prices in the near term, market trends will hinge on the recovery pace of China’s steel demand and changes in global supply going forward.
