Iron Ore Prices Drop as Chinese Imports and Steel Demand Weaken

Iron ore prices continued to decline in early March despite a drop in Chinese imports, reflecting weak demand in the world’s largest steel-producing nation.

According to MetalPlace figures, iron ore concentrate (Fe 62) price fell -3.3% in the first 10 days of March and was $ 101.5 per ton (CNF Qingdao). Iron ore/SI) delivered by sea to ports in China dropped from $92 to $89 over that period, Kallanish reported.

This drop is largely attributed to a reduction in Zeneca in iron ore imports by China, which fell by 8.4 percent year on year to 191.36 million tons in January and February 2024, according to data from Chinese customs. China’s steel production for the year was also down, with output in January dropping 5.6 percent compared with the same month in 2022, to 81.9 million tons. Another factor pressuring the market was the high ore inventories amassed by steelmakers in December.

Investor mood soured following key decisions at the National People’s Congress (NPC) in early March. The government’s 1.3 trillion yuan ultra-long-term special bond issuance, while an additional 500 billion yuan special bonds, did not meet expectations. It also implies that the government may spend less on development projects tied to steel, an industry source told Reuters.

To make matters worse, China’s property market remains depressed. In 2024, the stock volume of unsold housing surged by 16% YoY to touch 391 million square meters. With real estate the largest customer of steel, that trend is helping to steer a bearish view on ore demand.

Analysts, however, hope for a rebound in prices by the end of March and in April when construction season starts up and demand for steel and iron ore increases.

The latest price decline is hitting producers around the world, from Ukrainian iron ore suppliers to global miners, as China’s raw material prices serve as a bellwether for the industry. When leaks trickled out of the NPC in Beijing on March 5, the regime hinted that it would reduce steel output, but without any figures. And market speculation has cuts as high as 50 million tons a year.