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| Iron Ore Prices |
Key Drivers Behind Iron Ore Price Rally in July
In July, iron ore prices surged, reaching their highest level since February due to strong demand signals and strategic infrastructure projects in China. The September futures contract on the Dalian Exchange climbed to $112.74 per ton by July 21, marking a 14% increase from early July. Simultaneously, Singapore Exchange August contracts rose 11.3% to $103.6 per ton. This robust price growth reflects both market optimism and expectations of sustained steel demand, particularly fueled by China’s recent policy initiatives.
China’s Hydropower Megaproject and Stable Metallurgical Output
The announcement of a massive hydropower project in Tibet, valued at 1.2 trillion yuan, primarily drove the iron ore price rally. The plan to build five hydroelectric power plants with a combined capacity of 60 GW—triple that of the Three Gorges Dam—signals significant infrastructure expansion. Consequently, this project boosts prospects for long-term steel demand, especially for long-length rolled steel products. Meanwhile, Chinese pig iron production remained stable, with some plants accelerating capacity restoration after seasonal slowdowns. This operational stability supports continued iron ore purchases and underpins the price gains.
Market Volatility Amid Regulatory Caution and Export Supply Trends
However, price volatility persisted due to regulatory uncertainties. The Chinese Ministry of Industry’s announcement about upcoming structural reforms and phasing out obsolete steel capacities raised concerns over raw material demand declines. These policy signals caused partial profit-taking in futures markets and temporary price corrections. Conversely, analysts note favorable supply-demand fundamentals as export volumes slightly contracted and Beijing’s anticipated infrastructure stimulus measures may further prop up demand. Thus, iron ore prices are expected to remain volatile but generally trend upward in the near term.
ScrapInsight Commentary
China’s hydropower megaproject reflects a strategic pivot toward sustainable infrastructure, likely boosting steel demand and supporting iron ore prices. Regulatory reforms introduce uncertainty, but market fundamentals remain firm, suggesting a cautiously optimistic price outlook. Investors should monitor policy signals and capacity controls, as these will shape iron ore’s trajectory through Q3 and beyond.
