Iron Ore Prices Surge Over 10% Amid China’s Infrastructure Boost

Iron Ore Prices Climb on China’s Stimulus and Infrastructure Plans

Iron ore prices surged more than 10% in July, fueled by China’s aggressive infrastructure stimulus. September futures on the Dalian Exchange topped $112 per ton, while Singapore’s August contracts surpassed $103 per ton. Investors responded to the Chinese government’s announcement of large-scale infrastructure projects, including hydroelectric power plants on the Yarlung Tsangpo River, valued at over 1.2 trillion yuan. These initiatives boosted optimism across the metals and steel markets.

Despite concerns from the Chinese Ministry of Industry about reducing obsolete steel capacity, fundamental market drivers remain strong. High blast furnace utilization rates and low port inventories have sustained iron ore demand. Mid-July data showed increased steel and pig iron production, along with falling rebar inventories, signaling recovering end-user demand.

Market Uncertainty and Future Price Outlook

Although prices rose sharply, the market faced some correction due to speculative concerns and doubts about steel sector reforms. Traders remain cautious ahead of Beijing’s Politburo meeting, balancing profit-taking against optimism from government projects. Moody’s forecasts iron ore prices to stabilize between $80 and $100 per ton over the next 12-18 months, considering China’s weak demand and global supply pressures. Analysts at BMI Country Risk maintain a $100 average price forecast for 2025, reflecting a balance of factors.

SuperMetalPrice Commentary:

Iron ore’s recent rally reflects the pivotal role of Chinese infrastructure policy in global metals markets. While short-term volatility remains, sustained government investment in energy and infrastructure should support prices above $100 per ton. Traders must watch Beijing’s policy signals closely, as China’s steel production and stimulus measures will likely dictate the market’s direction for the remainder of 2025.