TRADE REVIEW: China trade curb relief, Middle East diversions lift Q2 Asia iron ore supply

This report is part of the S&P Global Energy Metals Trade Review series, where we dig through datasets and digest some of the key trends in iron ore, metallurgical coal, copper, alumina, cobalt, lithium, nickel and steel and scrap. We also explore what the next few months could bring, from supply and demand shifts to new arbitrages and quality spread fluctuations.

China's lifting of trade curbs on BHP products and the diversion of high‑grade concentrates from the Middle East amid the conflict are expected to boost seaborne iron ore supply to Asia in the second quarter of 2026, market participants said. Meanwhile, higher energy prices resulting from the conflict have increased freight rates and raised operating costs at mines and steelworks.

The Platts Iron Ore Index, or IODEX, rose 10% in March following the outbreak of the Middle East war, reaching $110/dry metric ton CFR China on March 17, the highest since July 2024. Platts is part of S&P Global Energy.

Prices on a CFR China basis increased in part due to higher freight rates, as iron ore Capesize freight rates from Western Australia to Qingdao, China, rose from $10.20/metric ton at the end of February to $13.45/mt in mid-March, according to Platts data.

Freight rates pared gains in the latter half of March, settling at $13.25/dmt by the end of April, Platts data show.

China's unofficial extension of import curbs to BHP's Newman High Grade Fines in mid-March -- alongside existing restrictions on Jimblebar Fines and Jinbao fines -- also contributed to higher prices. However, market participants noted a significant shift April 14, when China relaxed seaborne import curbs.

Curbs fallout

After months of negotiations, BHP said April 22 that it had concluded iron ore sales contract discussions with China Mineral Resources Group, China's state-run iron ore buyer.

The differentials for BHP products traded in the spot seaborne market -- including Mining Area C Fines and other restricted products -- initially widened due to additional curbs, before narrowing as Chinese steelmakers avoided purchasing these products directly from the miner in the seaborne spot market.

MACF's discount to the 61% Fe index widened from $3.45/dmt at the start of 2026 to $5.55/dmt on March 24, then narrowed sharply to $1.39/dmt by April 24 after the curbs were relaxed, according to Platts data.

NHGF traded at its widest discount of $5.30/dmt to the 61% Fe index on Jan. 20 and remained around $5.20/dmt on March 12, the day China's extension of curbs was first reported, Platts data show. The next spot NHGF sale by BHP was not reported until April 15, when it traded at a $2/dmt discount.

JMBF, the first product to be placed on China's restricted list, recorded its first spot sale by the miner since November 2025 on April 16, trading at a $5.80/dmt discount to the 61% Fe index, according to Platts data.

"There have been a few more diverted trades to ex-China markets such as Vietnam and India for NHGF and JMBF since the curbs, with pricing levels progressively worsening, signaling the effects of the advisory even beyond China," said a Chinese trader source.

Conversely, premiums for Rio Tinto's Pilbara Blend Fines increased as its close alternatives were restricted from spot trading but dropped sharply when BHP's spot supply resumed. PBF premiums over IODEX CFR China rose from $1.15/dmt at the start of 2026 to $2.73/dmt on April 7, before falling to $1.20/dmt by April 27, Platts data show.

Price divergence among medium-grade fines reflected factors beyond chemical specifications, as shown by the near-parity trading of the three Pilbara brands in August-September 2025 and their rapid price convergence once China lifted trading restrictions.

Although seaborne restrictions have been lifted, market participants continue to observe lingering effects from earlier curbs on BHP products, primarily due to Chinese port stockpiles accumulated during the restrictions and ongoing price competition from buyers holding discounted cargoes.

Platts incorporates these curb-related price factors into its assessments by normalizing each brand to the IODEX using brand adjustments. The brand adjustment reflects the value difference observed for each brand relative to the IODEX basis specifications, arising from factors beyond chemical specifications and delivery timing.

After the curb extension, Platts widened the brand adjustment for all three BHP fines products -- from $4.90/dmt on March 10 to as much as $6.80/dmt on March 24 for MACF -- to reflect the associated price decline. Once the curb was lifted, the adjustment decreased to $2.50/dmt by April 24.

In response to market feedback highlighting the need to track brand adjustments as standalone symbols, Platts launched assessments for brand adjustments applied to each of the five main medium-grade iron ore brands that contribute to the IODEX, effective April 1, 2026.

Redirected cargoes

In the high-grade iron ore market, the reduced supply of Vale's Iron Ore Carajas Fines in the first quarter was offset by increased volumes from Guinean sources and Middle East-bound cargoes redirected to China amid the war; however, overall demand remains subdued due to weaker mill margins.

Spot sales of Vale's flagship high-grade IOCJ totaled 640,000 mt in the first quarter, down from 980,000 mt in the previous quarter, according to company data.

Meanwhile, spot tenders from Guinea's Simandou have risen, with seven tenders concluded in the first quarter, totaling 1.2 million mt, Platts data show.

Simandou pricing during the first quarter showed volatility, ranging from a 10-cent/dmt premium to a $3.80/dmt discount relative to the 65% Fe index, according to market sources. The product traded at a notable discount to Vale's IOCJ, which market sources attributed to its higher alumina content, a limited customer base as a new product and uncertainty regarding its sintering performance.

As the war in the Middle East disrupted trade flows through the Strait of Hormuz, China emerged as the primary alternative destination for Brazilian, Canadian and Swedish term contract high-grade concentrates originally intended for Middle Eastern consumption, supported by its substantial iron ore demand and flexibility in utilizing concentrates for both pelletizing and sintering.

Prices for high-grade concentrates sold into China have come under pressure. Brazilian Minas Rio Pellet Feed traded at a 3.85% discount to the 65% Fe index CFR China in late April, compared with a 2.45% discount in early March, according to Platts data.

Indirect competition from higher concentrate supply, combined with weaker mill margins, narrowed the iron ore fines spread between 65% Fe and 61% Fe from $19.40/dmt on March 10 to $15.70/dmt at the end of April, Platts data show.

Futures rally

In the first quarter of 2026, iron ore futures traded on the Singapore Exchange saw average daily volumes and open interest rise for both fines and lump, as volatile market conditions -- as a result of import curbs and the Middle East war -- fueled hedging demand.

The average daily volume of IODEX Iron Ore futures contracts closed at 27.6 million mt in the first quarter, up 35% year over year and 14% from the previous quarter, according to SGX data.

For lump premium futures, the average daily volume in the first quarter nearly doubled compared with the previous quarter, reaching 114,000 mt -- up from 22,000 mt in the same quarter a year earlier.

The increase in lump futures volumes during the quarter was largely driven by market participants positioning themselves for a rebound in lump premiums from multiyear lows, an international trader source said.