- Iron ore plunges 3.12% on the Dalian exchange, trading at 682.5 yuan ($101.84) per metric ton.
- This marks the lowest price since April 9, 2025, reflecting crushed margins in China.
- Only 7% of Chinese steelmills operated at a profit at the end of September.
The drop in iron ore prices in China is hitting major exporters listed on the B3 hard. With the benchmark contract reaching an 18-month low, pressure on the margins and earnings of metal producers is intensifying and dampening local market optimism.
Why Did Iron Ore Plunge on the Dalian Exchange?
According to a Reuters report compiled by InfoMoney, iron ore prices on the Chinese Dalian exchange hit an 18-month low on Thursday, marking the resumption of trading following a weeklong holiday in the world's top consumer of the raw material.
The most-traded iron ore contract on the Dalian Commodity Exchange (DCE) ended the session down a sharp 3.12% at 682.5 yuan (equivalent to $101.84) per metric ton. This is the lowest level recorded since April 9, 2025.
What Is Happening to Chinese Steelmakers?
According to analysis from First Futures brokerage and data from a Mysteel consultancy survey, steelmaker profitability in China remains under intense pressure, which directly depresses the outlook for future demand for the metal input.
Only about 7% of Chinese steelmills were operating at a profit at the end of September. As a direct result of mounting losses, several local plants have already initiated or scheduled preventive maintenance on their equipment, curtailing industrial activity.
Reflecting this pullback, average daily hot metal production—a key leading indicator of physical demand for iron ore—fell to 2.34 million tons, reaching its lowest level in six months.
What Does This Mean for VALE3 and Brazilian Exporters?
According to reports from Bradesco BBI and BTG Pactual, metal and pulp exporting companies have lagged behind the stock market's recent rally, which has been driven by post-election domestic optimism.
While investor focus has shifted toward domestically focused stocks, exporters face a dual challenge: declining international iron ore prices and the simultaneous appreciation of the Brazilian real against the U.S. dollar, which compresses revenues when converted into local currency.
Extended maintenance at Chinese plants and depressed iron ore prices limit the recovery of valuations for VALE3, GGBR4, and CSNA3.
Additional economic packages in Beijing could reverse Asian steelmill margins and boost the global price of the input.
If you invest in VALE3 or steelmakers such as GGBR4 and CSNA3, the external environment poses barriers to quick price gains on the B3. Unfavorable iron ore fluctuations reduce short-term cash flow expectations across the basic materials sector.
What to Watch Moving Forward
To monitor upcoming developments in the commodities market and their impact on your portfolio, keep an eye on key operational indicators in the sector.
Asian steelmill margins — monitor new Mysteel surveys regarding the proportion of profitable mills in China.
Real-dollar exchange rate — watch domestic currency trends, as a stronger real amplifies the impact of falling international iron ore prices.
Hot metal production indicators — track whether the 2.34 million ton daily mark drops further in the coming weeks.
