Iron Ore Price Forecast: Iron Ore Rises Above CNY 715 as Chinese Mills Restock Ahead of Golden Week

Chinese iron ore futures climbed above CNY 715 per tonne on Monday, extending gains for a fourth consecutive session as steel mills increased purchases ahead of China’s extended National Day Golden Week holiday in early October. The recovery comes after iron ore recently traded near one-month lows, with pre-holiday restocking providing an important short-term demand catalyst.

The improvement in sentiment is also linked to efforts by several Chinese steelmakers to reduce production and steel inventories as profitability deteriorates. While lower steel output normally represents a headwind for iron ore consumption, production cuts can reduce finished-steel inventories and potentially improve mill margins, creating a more sustainable demand environment if steel prices stabilise.

However, the underlying iron ore fundamentals remain mixed. Inventories at China’s 35 major ports increased by 840,000 tonnes week-on-week to 144.33 million tonnes as of September 18, reversing the earlier destocking trend. SMM data also showed that daily port departures declined slightly to around 3.21 million tonnes, while elevated seaborne shipments continued to feed additional supply into China.

At the same time, China’s steel industry remains under pressure. Steel mills are facing weak downstream demand and shrinking margins, while blast-furnace operating rates and hot-metal output have begun to soften as mills increase maintenance and production controls. Data for September 16 showed blast-furnace utilisation across 242 monitored mills at 88.93%, with daily hot-metal production falling by about 3,700 tonnes to approximately 2.399 million tonnes.

The market is therefore balancing a short-term restocking cycle against a broader supply-demand picture in which iron ore inventories remain high and steelmaking profitability remains weak.

Iron Ore Market Snapshot

Iron Ore Price Today: CNY 715 Becomes the Key Short-Term Battleground

Iron ore has recovered from its September lows, with the Dalian contract rebounding after reaching approximately CNY 707.5 earlier in the month. SMM data showed the most-active DCE contract at CNY 710.5 on September 17, compared with CNY 718 at the start of the previous week.

The move above CNY 715 therefore represents a recovery from the recent correction rather than a confirmed change in the longer-term fundamental trend.

The immediate question for traders is whether pre-holiday buying can carry prices through the CNY 718-720 region and toward CNY 730-740, or whether rising inventories and weak steel margins eventually pull prices back toward CNY 700-710.

Trading activity has already responded to the approaching holiday. Seaborne iron-ore cargo trading volume surged 43% to 1.41 million tonnes on September 16, according to Trading Economics, as Chinese steelmakers increased purchases ahead of the National Day holiday.

Golden Week Restocking Supports Near-Term Demand

The approaching National Day holiday is one of the strongest short-term bullish factors for iron ore.

China’s Golden Week holiday begins in early October, and steelmakers traditionally build inventories ahead of periods when logistics and trading activity can be disrupted.

This restocking demand is particularly important because it can temporarily offset weaker underlying steel consumption.

SMM said pre-holiday stockpiling was providing support to iron ore prices, although it also noted that the recent rebound in port inventories meant the market was likely to consolidate rather than enter an unrestricted rally.

The distinction is important.

Restocking can lift iron ore prices even when final steel demand remains relatively weak.

That makes the current rally potentially more dependent on inventory management than on a major improvement in China’s construction or manufacturing demand.

Chinese Steel Mills Are Cutting Production

Several steelmakers have pledged to reduce production as profitability deteriorates.

At first glance, lower steel production is bearish for iron ore because blast furnaces consume less raw material. But the market response is more complicated.

If mills reduce output enough to stabilise steel inventories and prices, their margins could eventually improve. That could create a healthier demand environment for iron ore once production resumes.

SMM reported that steel-mill losses had widened and maintenance-driven production cuts were accumulating, while demand during China’s traditional September-October peak season remained weaker than expected.

This creates a delicate balance:

Lower steel output is negative for immediate iron-ore consumption, but successful production controls could improve the profitability of the steel sector.

Steel Profitability Remains a Major Headwind

The profitability of Chinese steel mills remains one of the most important variables for iron ore.

Higher raw-material costs, particularly coking coal and coke, have increased pressure on steel margins, while downstream steel demand remains relatively subdued.

SMM reported that the losses of blast-furnace mills had expanded and that higher coke costs were forcing mills to consider additional maintenance.

This limits the ability of steelmakers to aggressively increase iron-ore purchases once the Golden Week restocking cycle ends.

For iron ore to sustain a stronger rally beyond the holiday period, the market will likely need evidence that steel profitability is improving rather than simply that mills are rebuilding short-term inventories.

Chinese Iron Ore Port Inventories Rise to 144.33 Million Tonnes

The clearest bearish fundamental signal is the renewed increase in port inventories.

SMM reported that inventories at China’s 35 major ports rose 840,000 tonnes week-on-week to 144.33 million tonnes on September 18. The increase reversed the earlier destocking trend.

The sequence is important.

Inventories had fallen from 143.91 million tonnes on September 4 to 143.49 million tonnes on September 11, before increasing to 144.33 million tonnes one week later.

That means the market is now receiving evidence that stronger seaborne supply is beginning to reach Chinese ports.

If inventories continue increasing after the Golden Week restocking period, the bearish fundamental argument would become stronger.

Seaborne Supply Is Increasing

Supply from major exporters has also been rising.

SMM data showed iron-ore departures from 123 ports increasing from 30.32 million tonnes in the week of August 28 to 34.45 million tonnes in the week of September 4 and then to 37.41 million tonnes in the week of September 11.

That represented an increase of roughly 23% over two weeks.

Arrivals at 61 Chinese ports also increased and remained elevated at around 26.91 million tonnes in the week of September 11.

This supply flow is becoming increasingly important because it suggests the recent increase in inventories is not simply a temporary statistical move.

Higher shipments combined with weak steel consumption could leave Chinese buyers with ample raw-material stocks after the holiday.

Coking Coal Supply Could Reduce Cost Pressure

The outlook for coking coal is another factor affecting iron ore.

Following the fatal mine accident in Shanxi earlier this year, widespread safety inspections temporarily reduced domestic coking-coal production and tightened availability. Production has subsequently resumed at a number of mines, although the pace of recovery has varied.

SMM reported in September that Shanxi mines were gradually resuming production, although actual supply releases remained limited and safety inspections continued to restrict output.

A broader recovery in coking-coal supply during September and October could reduce raw-material cost pressure on steelmakers.

That could have two opposing effects on iron ore.

Lower coking-coal prices could improve steel margins, supporting steel production and eventually iron-ore demand. But if steel prices remain weak, cheaper coking coal could simply reduce input costs without generating a meaningful increase in output.

China’s Property Sector Remains a Structural Drag

The property market remains a longer-term concern for Chinese steel demand.

Recent Chinese data showed continued weakness in new-home prices, highlighting the prolonged pressure on the property sector. Trading Economics noted that the property downturn remains a drag on steel demand despite the short-term restocking cycle.

This matters because construction is a major source of demand for long steel products and therefore indirectly influences iron-ore consumption.

Government support measures and infrastructure investment can offset some of this weakness, but the current market has not yet demonstrated a broad-based acceleration in end-use steel demand.

Steel Inventories Are Showing Some Improvement

There is, however, a more constructive development within the Chinese steel market.

Mysteel data showed inventories of the five major carbon-steel products held by traders fell 2% week-on-week to 18.5 million tonnes as of September 17. Rebar inventories fell 3.5%, while hot-rolled coil inventories declined 1.6%.

This indicates that finished-steel inventories are being reduced even while iron-ore inventories are rebuilding.

If this trend continues, it could eventually provide a better foundation for steel prices and mill margins.

For iron ore, however, the key question is whether steel inventory reductions are being driven by genuine end-user demand or simply by lower production.

Iron Ore Technical Analysis

The technical picture is improving after the recovery from the CNY 707.5 area.

The first important upside zone is CNY 718-720, followed by the broader CNY 730-740 range. A sustained break above CNY 720 would strengthen the recovery structure and put the September highs back into focus.

On the downside, CNY 710 is the first area traders may watch, followed by CNY 707.5 and then the psychologically important CNY 700 region.

Current market analysis from Guangzhou Futures places iron ore within a broader CNY 690-740 range and characterises the ferrous complex as facing relatively weak supply-demand conditions.

That suggests the current move above CNY 715 should be viewed within a broader trading range rather than automatically treated as the beginning of a sustained trend.

Bullish Sentiment

1. Pre-Golden Week Restocking Is Increasing Demand

Chinese steelmakers are increasing purchases ahead of the extended National Day holiday, with seaborne cargo trading volumes jumping 43% in one recent session.

2. Steel Inventories Are Declining

Trader inventories of major steel products declined 2% week-on-week, with particularly strong reductions in rebar and HRC inventories.

3. Production Cuts Could Stabilise Steel Prices

Steel mills are cutting output as losses increase. If those cuts reduce excess steel inventories, they could eventually support steel prices and improve mill economics.

4. The CNY 707.5 Area Has Provided Recent Support

Iron ore recovered from approximately CNY 707.5, demonstrating that buyers remain active below the CNY 710 area.

5. Peak-Season Demand Could Improve

September and October are traditionally important periods for Chinese construction and industrial activity, while infrastructure spending and seasonal restocking could provide additional demand.

Bearish Sentiment

1. Port Inventories Are Rising

China’s 35 major ports held 144.33 million tonnes of iron ore on September 18, an increase of 840,000 tonnes from the previous week.

2. Seaborne Supply Has Increased

Iron-ore departures from major ports have risen sharply, with SMM data showing a roughly 23% increase over two weeks.

3. Steel-Mill Margins Remain Weak

Higher raw-material costs and weak downstream steel demand continue to pressure steel profitability, encouraging further production cuts.

4. Coking-Coal Supply Is Gradually Recovering

As more Shanxi mines resume production following earlier safety inspections, coking-coal availability could improve and reduce some of the raw-material scarcity premium.

5. Chinese Property Demand Remains Weak

The prolonged property-sector downturn continues to constrain construction-related steel demand and limits the upside potential for raw materials.

Iron Ore Price Forecast: What Traders Are Watching

The immediate technical map is:

Upside levels:
CNY 718-720 → CNY 730 → CNY 740

Support levels:
CNY 710 → CNY 707.5 → CNY 700

A sustained move above CNY 720 would strengthen the short-term recovery and shift attention toward CNY 730-740.

A failure to hold CNY 710, particularly if accompanied by another increase in port inventories, would increase the risk of a retest of CNY 707.5 and potentially CNY 700.

The wider market remains range-bound between improving seasonal demand and a substantial supply overhang.

Iron Ore Outlook: Restocking Versus Rising Inventories

The central question for iron ore is whether the Golden Week restocking cycle is strong enough to absorb the additional supply entering China.

On one side, mills are buying ahead of the holiday, steel inventories are declining and production controls could help stabilise the finished-steel market.

On the other, iron-ore inventories have already turned higher, seaborne shipments are elevated and steel mills remain under pressure from weak profitability.

This means the current rally has a clear fundamental catalyst, but it has not yet resolved the underlying supply-demand imbalance.

The market will therefore be watching what happens after the pre-holiday restocking wave.

If port inventories begin falling again after the holiday, the current recovery could develop into a broader move higher.

If inventories continue to rise while steel production falls, the CNY 730-740 region could become difficult to sustain.

Iron Ore Fundamental Outlook

Iron ore enters the final weeks before Golden Week with a two-speed fundamental picture.

The short-term outlook is supported by restocking, with Chinese mills increasing purchases before the holiday and finished-steel inventories declining.

The medium-term outlook remains constrained by supply, with major exporters maintaining strong shipment volumes and Chinese port inventories rebuilding.

Steel profitability is likely to remain the critical variable.

If production controls successfully reduce finished-steel inventories and allow margins to recover, iron-ore demand could strengthen beyond the holiday.

If steel demand remains weak and mills continue cutting output, the current restocking cycle may prove temporary and leave iron ore facing renewed downward pressure once the holiday demand has passed.

Today Markets View

Iron ore’s fourth consecutive session of gains reflects stronger pre-holiday buying rather than a complete reversal in the underlying fundamentals.

The main bullish catalysts are Golden Week restocking, declining steel inventories, production controls and the potential stabilisation of Chinese steel prices.

The principal bearish factors remain 144.33 million tonnes of port inventories, rising seaborne supply, weak steel-mill profitability, recovering coking-coal production and continued weakness in China’s property sector.

The CNY 715 area is now an important short-term reference point. A sustained move through CNY 720 would put CNY 730 and CNY 740 into focus, while a break below CNY 710 would reopen the CNY 707.5-CNY 700 support zone.

For traders, the key question is whether pre-Golden Week restocking develops into genuine improvement in steel demand or remains a temporary inventory-building cycle. Port inventories, blast-furnace utilisation, hot-metal output, steel margins and post-holiday demand will be critical indicators.

Louis Roche, Analyst, Today Markets

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