China’s lower-grade iron ore market set to grow faster in 2025: sources

China’s lower-grade iron ore market set to grow faster in 2025: sources
Published by:Norman Fong<>
5 May 2025 @ 14:41 UTC

The low-grade iron ore market in China is set to expand at a faster pace in 2025, particularly in a period when tighter steelmaking margins amid chronically poor downstream steel demand have forced Chinese mills to depend on lower-cost alternatives, sources have told Fastmarkets. Sources attributed higher volumes of low-grade iron ore in the Chinese market to two main reasons: stronger production volumes from mainstay miners and production ramp-ups from relatively newer suppliers.
Strong output from mid-to-low-grade producers A ramp-up of BHP’s South Flank project in Western Australia and a 13% increase in overall productive movement resulted in the company’s iron ore production rising by 1% year on year in the nine months ended March, according to its operational review released on April 17.
Fortescue’s iron ore production also rose due to a strong supply chain performance. Output increased by 3% year on year to 97.1 million tonnes in the first half of its 2025 financial year, which began on July 1.
Iron ore shipments from Australia surged by 20.4% during April 7-11 from the previous week, reaching 18 million tonnes, surpassing a previous peak in mid-March, according to a local information provider.
Newer miners flex production volumes Australian mining company Mineral Resources (MinRes) has said that it is on track to significantly enhance ore production with the Onslow Iron project in Western Australia’s Pilbara region.
The company anticipates reaching a nameplate capacity of 35 million tonnes per year by the first quarter of the 2026 financial year, following the addition of new transshipping vessels and infrastructure upgrades, according to its latest quarterly results release.
A bulk of ore shipments from the Onslow project is expected to be directed into the Chinese seaborne market through the direct ownership of China’s Baowu Group, as well as other trading streams, according to a trader in Singapore.
A steady uptick in volumes of Onslow project fines at Chinese ports has been seen since the fourth quarter of 2024, a Hong Kong-based trader told Fastmarkets.
The trader added that the uptake of the Onslow product across Chinese mills has been particularly smooth because the ore blend bears many similarities to other lower-grade blends from the Pilbara region.
Stronger competition within low-grade market The influx of new alternatives in the low-grade iron ore sector within the Chinese portside market is already being felt in the form of wider discounts on mainstay low-grade blends.
Discounts for Fortescue’s Super Special Fines increased to their widest level in eight months in April, up by 2.25 percentage points to 14.25%, according to various market participants.
April discounts for Fortescue Blended Fines also stood at their widest levels in nine months at 10%, rising by 2.25 percentage points from March.
A confluence of stronger supply and a pivot toward mid-grade sinter fines by Chinese mills since the second half of March has created stronger downward pressure for seaborne and portside prices, a Shanghai-based trader said.
The trader added that the recent uptick in steelmaking margins across Chinese mills was attributed as the main reason behind the recent pivot towards mid-grade fines.
Hot-rolled coil producers and flat steel producers were heard to be earning a profit of about 100-250 yuan ($14-34) per tonne in the first half of April, following the sharp dip in raw material prices, according to a trader in Beijing.
The trader added that stronger export demand for billets and other finished steel products also contributed to an uptick in steelmaker revenues.
Difficult journey ahead for low-grade market While low-grade sinter fines are likely to remain as a mainstay in the Chinese steelmaking industry, a mixture of factors — such as (1) lower crude steel production, (2) environmentally related sintering controls and (3) the steelmaking industry’s increased emphasis toward electric-arc furnace steelmaking — remain likely threats to realized shipment prices, according to various sources.
In times of lukewarm downstream demand in the domestic and export markets, Chinese mills fully embrace the benefits of low-cost iron ore, a second trader in Beijing said.
But it remains hard to imagine low-grade ores having a continued predominant presence in China’s envisioned future of green steelmaking unless the industry finds a meaningful way to repurpose the use of low-grade ores, the trader added.