LAUNCESTON - Iron-ore is the one major commodity that is sailing unaffected through the storm created by the US/Israeli war on Iran, but the relative calm masks shifting dynamics for the key steel raw material.

China buys about three-quarters of all global seaborne iron-ore, using it to feed mills that produce just over half of all the world's steel.

The vast majority of its iron ore is sourced from just two countries, Australia and Brazil, with minor flows from other producers like South Africa and Guinea.

This is a trade that bypasses the Strait of Hormuz, the narrow waterway between Iran and Oman that has been effectively closed to vessels since the US and Israel launched an aerial campaign against Iran on February 28.

Iron-ore prices have remained largely steady since the start of the conflict, unlike the volatility seen in commodities like crude oil, refined products, liquefied natural gas, coal, copper and aluminium.

Singapore Exchange iron-ore contracts have traded in a $14/t range anchored around $105/t so far this year.

They did climb from a low of $98.20/t on February 20 to a high of $111.91/t on May 11 amid some concern among Chinese buyers that marine bunker fuel might fall into short supply because of the effective closure of the Strait of Hormuz.

But as fears of imminent fuel shortages eased, iron-ore prices have moderated, ending at $101.65/t on June 10.

The steady price has been accompanied by modest growth in China's imports, with customs data showing arrivals of 516.26-million tons in the first five months of the year, up 6.3% from a year earlier.

MAY DATA DISCREPANCY

However, May imports were 97.71-million tons, down 6% from April and a three-month low, according to the official figures.

The soft May imports were in contrast to estimates by commodity analysts DBX Commodities and Kpler.

DBX tracked seaborne iron ore imports at 105.56-million tons in May, while Kpler estimated arrivals at 106.4-million.

While data from the tracking services doesn't always align closely with customs, a gap of 8-million tons for a month is
unusual.

This suggests that the official numbers are likely to rebound in June as it is possible that the lower import number for May reflected that some cargoes that arrived around the end of the month were pushed into June for assessment.

Nonetheless, China's iron ore imports have been performing better than the steel industry, which has seen output decline 4.1% in the first four months of the year to 331.12-million tons.

Part of the gap between solid iron ore imports and soft steel production can be explained by the rise in iron-ore inventories at China's ports, which reached a record high of 166.91-million tons in the week to March 13.

They have since declined to 159.09-million tons in the week to June 5, according to data from consultants SteelHome, but are still 21% higher than the 132-million tons in the same week in 2025.

Another factor driving iron ore imports is the decline in both volumes and grades of domestic iron-ore.

China's iron-ore output was 326.8-million tons in the first four months of the year, down 1% from a year earlier, according to MySteel data.

This follows a drop of 2.8% in 2025 to 983.7-million tons from 1.04-billion in 2024.

China's domestic iron-ore contains around 20% to 30% iron, meaning it has to be upgraded to match imported grades of 60% to 65%, a process that is costly and energy-intensive.