Imported iron ore margins narrow to 9.62 yuan/mt on higher brand premiums

Today, the average margin on imported iron ore narrowed to 9.62 yuan per metric ton, down from 11.52 yuan, according to data from the Shanghai Metals Market (SMM). The decline in margins was primarily attributed to higher brand premiums and weaker spot prices.

On the production side, BHP reported in its Q1 FY2027 results that Western Australia Iron Ore (WAIO) production reached 71.91 million metric tons on a 100% basis, up 2.4% year-on-year. The company's full-year guidance for WAIO remains unchanged, with estimates ranging from 286 to 298 million metric tons.

Despite the increase in production, mainstream supply volumes remained steady, and the overall supply-side situation remained unchanged. Freight costs on the Australia-China route increased by 0.49 yuan per metric ton week-on-week to 11.91 yuan per ton, while the Brazil-China route saw a decrease to 30.46 yuan per ton. However, the net change in Costs of Freight and Responsibility (CFR) remained limited.

Demand-side factors also contributed to the narrowing margin. Steel mills continue to operate at a loss, and restocking is being conducted on a just-in-need basis. Port inventories have started to build again in recent weeks. Iron ore futures experienced a loss of upward momentum after yesterday's rebound, and spot prices have edged lower.

Experts suggest that iron ore prices are expected to remain range-bound in the near term, with limited upside. Import margins are anticipated to hold in a modestly positive position.