China Mineral Resources Group, the state-backed trading arm, has warned that iron ore prices are drifting away from real market fundamentals as intensified speculative activity pushes prices higher at a pace that does not reflect actual supply and demand conditions.
In a report issued by its research unit — published on the WeChat account of the China Iron and Steel Association — the company stated that what it described as a “false rally” has re-emerged in the market, driven more by speculative trading than by genuine consumption-based transactions.
Data from the association showed that spot prices for iron ore jumped by more than 5% over a period of just over three weeks between November 7 and December 2, reaching around $107.80 per ton, despite several factors that should have exerted downward pressure on prices, including rising port inventories, weakening steel demand, and a decline in average molten iron output.
Despite this surge, prices later showed some correction, while futures prices have remained within a relatively narrow range above $100 per ton over the past four months.
China Mineral Resources Group also criticized what it described as unfair pricing practices within the sector, noting that such behavior significantly increases costs for Chinese steel mills. Earlier this year, the trading giant demonstrated its bargaining power by suspending acceptance of certain iron ore shipments from BHP Group in an effort to secure more favorable contract terms.
