On Wednesday, the main iron ore futures contract for September 2025 fell by over 1% intraday, hitting a new two-week low. Since July 15th, the main contract has retreated from above 750 yuan per tonne, accumulating a decline of nearly 3%. In contrast to the weakness in iron ore, finished steel products like rebar and hot-rolled coil showed relative resilience, leading to a recovery in the rebar-to-iron ore ratio. This divergent pattern of "weak ore, stable steel" highlights the core contradiction in the current ferrous metals supply chain: a negative feedback loop from weak downstream demand is now transmitting upstream to raw materials.

On the news front, BHP Group Ltd (ASX: BHP) and the union representing workers at Port Hedland in Western Australia indicated on Tuesday that they are nearing an agreement. The progress in discussions means the likelihood of a new round of strike action being announced before the next round of talks has diminished, reducing supply-side disruptions for iron ore. According to Mysteel data, during the period from July 13th to July 19th, 2026, total iron ore inventories at seven major ports in Australia and Brazil reached 14.997 million tonnes, an increase of 798,000 tonnes from the previous week. Port inventories are showing a slight accumulation trend, with current stockpiles at their highest level this year. Pressure from mine shipments is expected to persist, suggesting medium-term supply may remain ample. However, downstream demand is in its seasonal lull, increasing pressure on steel mills to cut production. High temperatures in eastern and southern China are constraining construction site progress, significantly slowing the pace of end-user procurement. Furthermore, as losses at steel mills widen, more mills are implementing production cuts and maintenance, suppressing immediate demand for iron ore. Consequently, the short-term fundamentals for iron ore are likely to maintain a combination of "high supply + weak demand + inventory accumulation," making it difficult to reverse the price pressure. If steel mill production cuts expand further, there is still room for molten iron output to decline, which could exert sustained downward pressure on iron ore prices.