Australia's iron ore (62% Fe, CFR China) price in the first quarter increased by US$3.7. In March alone, the prices soared by US$8.5. According to market participants, iron ore prices rose sharply in March, driven by three main factors.

First, concerns that China Mineral Resources Group may extend restrictions on purchases from BHP led buyers to secure cargoes in advance to avoid potential supply shortages. At the same time, steel mills accelerated the movement of iron ore from port inventories to their plants.

Second, the conflict in the Middle East pushed up energy and freight costs, raising overall expenses. It also tightened diesel supply in Australia, potentially affecting small- and medium-sized miners more significantly. However, the short-term impact is expected to remain limited, as Australia’s diesel reserves can cover around 30 days of supply.

Third, Australia’s cyclone season has increased the risk of supply disruptions. A tropical cyclone last week affected about 8 million tons of iron ore output, although production is expected to gradually recover.

Overall, despite ample iron ore supply due to lower crude steel production in China, high costs and seasonal demand are expected to keep iron ore prices fluctuating at elevated levels in the near term.