Renewed US-Iran conflict drives up prices

Iron ore prices held steady despite Hormuz volatility and mounting Australian supply risk, from a possible BHP strike to CMRG's export restrictions. Coal prices rebounded as renewed US-Iran tensions lifted fuel-switching dynamics. China built on its US soybean purchases, with COFCO reportedly booking cargoes ahead of a planned Trump-Xi meeting in September. Middle East hostilities also lifted aluminium prices and threaten renewed tightness in urea and sulphur supply. In freight, war-risk premiums are set to return toward pre-MOU levels as insurers reassess Middle East coverage.

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Iron Ore & Steel: Prices hold steady as supply risks offset bearish fundamentals

• Iron ore prices remained largely unchanged w/w despite supply disruption concerns from Australia and renewed volatility around the Strait of Hormuz. The DCE contract, September 2026 rose 0.7% w/w to close at 745.5 yuan/t on 9 July while the SGX 61% Fe August contract was trading up 0.5% w/w at $98.70/t at the time of writing. The Strait of Hormuz situation remains fluid, with fresh attacks stoking global concerns. The direct read-through to iron ore is limited, but the volatility is keeping Middle East-bound iron ore volumes subdued while adding broader risk to freight rates.
• Australia’s elevated supply is now exposed to disruption risk just as Brazil gains ground. A possible strike involving one-third of ~450 workers at BHP’s Port Hedland terminal has raised concerns, despite BHP closing a separate deal last week at South Flank/Mining Area C (a guaranteed 16% pay rise over four years plus higher allowances) has raised supply disruption concerns. BHP ships typically 0.5-0.8Mt/day from Finucane Island and Nelson Point installations. A single eight-hour stoppage will have little effect given elevated Chinese port inventories, but a longer disruption could tighten Australian supply in the seaborne market. Kpler data indicates BHP shipped 291.53Mt of iron ore from its Port Hedland operations in 2025, with around 86% of this volume bound for China. Combined with CMRG's restriction on FMG's Super Special Fines and Fortune Fines, this reinforces the narrative of tightening Australian supply into China.
• Global seaborne iron ore exports rose 7% y/y to 34.19Mt in the week ending 5 July, well above the five-year average of 30.2Mt, but roughly flat w/w. Australian shipments stood at 19.19Mt, up 10% y/y on a surge in exports to China, a run-rate current strike and CMRG risks could interrupt. Brazilian shipments eased w/w to 8.55Mt but held 23% y/y higher, gaining ground in China. Shipments to the Middle East stayed subdued on Hormuz constraints.
• On the demand side, Chinese seaborne iron ore imports increase 4% y/y at 25.19Mt in the week ending 5 July despite broader slowdown.  BHP and Vale shipments rose 23-24% w/w, while FMG and Rio Tinto exports fell 17% and 35% w/w respectively. Yet structural headwinds continue to weigh on domestic steel fundamentals. Crude steel production by CISA member mills averaged 2.02Mt in the ten days between 20 and 30 June, off 5% y/y from 2.13Mt seen last year. Overall, June saw average daily output drop 4% y/y to 2.07Mt. Combined with ample Chinese port inventories, downside pressures outweigh the upside, keeping prices just under $100/t through H2 2026.  A sustained recovery above $100/t would likely require a meaningful improvement in Chinese manufacturing and construction activity, a slower Simandou ramp-up, or a prolonged supply disruption. Hormuz remains a key monitorable from a freight perspective.

Daily crude steel production by CISA member mills (Mt)

Source: CISA

Coal: Coal prices rebound with renewed US-Iran tensions

• Cif ARA and fob Newcastle paper coal prices rebounded by around $3/t this week as tensions between Iran and the US increased, with conflict reescalating once more. Gas prices are rising, and this pushes coal prices higher where fuel switching dynamics are relevant, such as cif ARA and fob Newcastle. FOB Indonesia prices trended lower in response to prolonged rainfall's cooling effect and higher hydro output in China.

Energy commodities month-ahead paper contracts (Standardised values)

Source: Enverus

• Typhoon Maysak brought heavy to torrential rain across China’s southern regions, western Guangdong, Hainan Island and Yunnan in early July. Fangchenggang and Qinzhou in Guangxi recorded localised extremely heavy rain, with hourly rates of 30 to 80mm and some areas exceeding 100mm. Coal burn potential eases as cloudier conditions reduce air conditioning driven power demand, while the added rainfall lifts hydropower output. Air conditioning demand should rise once the rain clears and the rainy season ends, as high summer heat returns. Hydropower's relative contribution should ease at the same time, driving coal burn higher again through peak summer.
• Temperatures in Japan were below seasonal norms since June and will remain mild until the end of this week, which is also reducing the call on coal generation in the country. The meteorological agency forecasts temperatures will rise above seasonal normals after 11 July, which will increase coal and gas burn.
• China's safety inspections continue to weigh on domestic coking coal prices, which increases the competitiveness of imported material. The inspections are set to continue after another accident took place in early July, which will again compress coking coal supply.
• Petcoke prices found a bottom in the US Gulf in recent weeks, as petcoke gained competitiveness against coal in India, with some fuel switching taking place. Coal still retains competitiveness against petcoke in Turkey, but utilities are burning more coal now, and Russian coal prices have room to rise, which might erode coal's price discount, now at around 5% for cement sector buyers.

Turkey & EU delivered coal and petcoke prices (NAR 6,000kcal/kg basis, $/t)

Source: Argus

Grains & Oilseeds: China builds on US soybean purchase commitment

• After 0.2 Mt of US soybean sales to China had been reported for the week ending 18 June, sales for the week ending 25 June did not show any further purchases. However, following newswires suggesting that COFCO bought at least six cargoes of US soybeans for September and October delivery. The USDA subsequently reported that a further 0.5 mt of soybeans had been sold to China. President Trump has stated that he expects to host President Xi in the US around 24 September, encouraging hopes that current Chinese buying could continue.
• The meeting should also bring clarity and re-confirmation of China’s $17 bn purchase commitment of US agricultural products, not including soybeans. China has not bought any US corn this year, and it will not be able to meet the commitment without buying corn, even when pro-rated for the rest of this year.
• Warmer temperatures and lighter rainfall forecast across the US Midwest over the next two weeks are raising the weather premium priced into the US grains market. While such conditions may not be optimal for the development of the corn and soybean crops, neither is currently facing significant drought. Crop condition is slightly more favourable than the historical average. By 30 June, only 19% of the US corn and soybean crop was in drought condition as rains during June were mostly average to above average. July is usually the most influential month for US corn yield potential, due to the crop’s development stage at the time, whereas for soybeans it is usually August.

US crop area in moderate or more intensive drought (%)

Source: USDA

• In contrast, the EU corn crop is facing more intensive pressure following a consecutive heatwave in short succession. The French crop rated in good or excellent condition dropped 18 percentage points w/w to 56%, the lowest rating since at least 2015. This coincides with the crop’s pollination stage, so the adverse conditions are likely to result in a yield penalty. Front-month MATIF corn has been trading at a high not seen since August 2023 and is pricing at a strong premium to MATIF milling wheat.
• Harvest of Brazil’s safrinha corn crop is underway at 29% complete by 3 July, with progress slightly lagging the five-year average. Though less than a third complete, harvest results have been reportedly positive for Mato Grosso, but less favourable yields are expected for some smaller corn-producing states due to adverse weather conditions. With showers forecast across much of southern Brazil for the short-term, this may offer little respite to the harvest delays seen in the region. Exports lineup for July have been building but are still short of last year’s level.
• Harvest of Argentina’s corn crop reached over halfway complete by 1 July, with harvest of the early crop 79% complete and the late crop 25% complete. The arrival of showers during June has slowed harvest progress as crop moisture levels remain high, but pace is still in line with the historical average. As Argentine export sales continue to exceed the pace of last year, the outlook of a stronger export campaign y/y remains likely. With corn profitably appearing relatively attractive, anticipation of a similar planted area y/y could drive export sales further given the supply outlook. Exports had dropped for June but are expected to rebound in July.

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