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China’s state-backed buyer, China Mineral Resources Group (CMRG), has agreed a long-term iron ore supply deal with Rio Tinto covering November 2026 to May 2028, according to media reports. Contract volumes and pricing terms have not been disclosed. The agreement follows difficult negotiations. In early August, CMRG told some mills to halt talks with Rio.
Market Sentiment: Buyer Leverage Strengthens
Established in 2022, CMRG is centralising purchases to improve Chinese steelmakers’ bargaining power. Estimates suggest it negotiates over half of China’s annual iron ore imports. BHP has already secured a deal through June 2027 that includes greater use of yuan pricing, while Fortescue’s talks remain unresolved. The company warned on 22nd October that operations could be affected if no deal is reached by year-end.
This highlights growing buyer influence over pricing and procurement, though China still relies heavily on Australian supply.
Price signals remain weak. Singapore iron ore futures settled at US$90.60/t on 23rd October, down about 19% from the 11th May peak of US$111.91. China imported 954.97 million tonnes in January–September 2026, up 4.1% YoY, but September imports alone fell 5.6% YoY.
Port stocks reached 152.23 million tonnes on 23rd October, up 14% YoY. Rising imports and inventories amid weak steel demand suggest supply is running ahead of consumption.
Outlook: Cautious to Bearish
The Rio deal reduces uncertainty around supply arrangements but does not prove demand has improved or reveal whether CMRG secured lower prices. In our view, High inventories, subdued steel output and thin mill margins may cap any sustained recovery over the next two weeks. Prices could stabilise if restocking improves or supply tightens; otherwise, downside risks remain.
Our advice: Buyers should avoid aggressive stock-building and closely monitor futures, port inventories and mill margins.
