China's import losses to temper iron ore price uptick in Q2 amid thin seaborne liquidity

China's iron ore import losses will continue to act as a counterweight to global price strength in the second quarter, after steepening in Q1 as seaborne prices were stoked by expansionary Chinese fiscal and monetary policies while portside prices in the country lagged due to lackluster physical steel demand.

The 62% Fe iron ore index, or IODEX, rose 32% in Q1 to reach $158.30/dmt March 31 as positive policy signals in China buoyed expectations of strong demand recovery for steel and iron ore. Meanwhile, iron ore supply in Q1 turned weaker seasonally, particularly in Brazil due to a wetter-than-usual monsoon season and after Russia's invasion of Ukraine further tightened supply.