Iron Ore Surges on China Stimulus, Supply Constraints

Iron ore prices have climbed above $100 per ton for the first time since February 2025, driven by tighter supply from Australia and Brazil, shrinking Chinese port inventories, and strong steel mill demand as margins recover. Beijing's $170 billion hydropower mega-project and broader stimulus measures have fueled optimism for infrastructure-led economic growth, boosting steel demand. Technical indicators confirm a strong bullish trend, though analysts caution that the rally could be tempered by upcoming supply from projects like Rio Tinto's Simandou and record output from BHP. Chinese efforts to curb steel overcapacity and stabilize industrial sectors have improved steel mill profitability, sustaining high-grade iron ore demand. However, as China pursues decarbonization, lower blast furnace output may be necessary, introducing medium-term price risks. For now, the market outlook remains supported by tight supply, strong demand, and positive sentiment from infrastructure investment.