Iron Ore Prices Rally on Strong Chinese Steel Profits and Positive Trade Talk Momentum.
Prices surpass the $100 mark as resilient demand from a newly profitable Chinese steel sector and hopes of a US-China trade truce boost market sentiment.
SINGAPORE – Iron ore futures are demonstrating significant strength, with prices for August 5th surging past the $100 per tonne threshold to a one-week high. This rally is underpinned by a combination of resilient demand from a remarkably profitable Chinese steel industry and growing optimism surrounding the progress of US-China trade negotiations.
The buoyancy in the market is largely fueled by the robust performance of China’s steel sector. In the first half of 2025, large and medium-sized steel enterprises in China reported a staggering 63.26% year-on-year increase in gross profit, amounting to $8.3 billion. This solid profitability is encouraging mills to increase production, thereby bolstering the demand for iron ore, a key steelmaking ingredient. The improved financial health of the steel industry is attributed to self-disciplined production controls which have helped to balance supply and demand.
Adding to the positive market sentiment are Beijing’s ongoing efforts to curb excess steel production capacity. While analysts do not expect supply-side reforms on the scale seen between 2016 and 2018, the policy focus on managing overcapacity is contributing to market stability.
Meanwhile, investors are closely watching the positive developments in trade talks between the United States and China. Recent discussions have been described as “very positive,” with both sides working towards a potential extension of the current tariff truce, which is set to expire on August 12, 2025.These negotiations, which cover critical materials such as rare earth magnets, are a key factor in building broader economic ties and have been met with a positive reaction in the markets.
While the long-term sustainability of the high profits in the steel sector remains a point of caution for some analysts, the current combination of strong demand, disciplined production, and positive diplomatic momentum has created a decidedly bullish atmosphere for the iron ore market.
