Australia's iron ore (62% Fe, CFR China) price on February 4 increased significantly by US$0.95 to US$103.85. Indonesia, the world’s largest thermal coal exporter, implemented policies reducing coal production by 40% to 70% this year compared to last year, prompting some mining companies to halt exports.

The move drove up Chinese coking coal and coke futures, with coking coal experiencing particularly strong gains. Chinese spot steel prices were also seen to have a slight rebound, resulting in iron ore prices halting their decline and starting to rise.

Market participants, however, point out that despite the disruption to raw material prices caused by Indonesia’s coal production cuts, market demand remains weak ahead of the Lunar New Year. As a result, the short-term impact on steel price increases may be limited. With inventories of iron ore at Chinese ports and steel mills continuing to accumulate, iron ore is expected to remain range-bound in the near term.