Iron Ore Prices Continue to Drop Amid Struggling Chinese Steel Sector
The world of iron ore prices is experiencing a downward trend for the sixth week in a row, as China’s steel sector faces challenges and port inventories of the raw material stabilize.
Singapore Exchange (SGX) futures closed at $101.49 per metric ton on Aug. 9, slightly up from the four-month low of $100.14 the day before. The benchmark contract has been on a downward spiral since July 5, decreasing by 29% from its peak of $143.60 per ton earlier in the year.
Market sentiment has shifted from optimism about Beijing’s efforts to boost the construction sector to the reality of struggling steel mills. Recent data on China’s steel sector, which contributes to over half of global output, has been bearish. Shanghai steel rebar contracts closed at 3,286 yuan ($458.55) per ton last week, the lowest since October 2020. The China Iron and Steel Association reported a decline in crude steel output, attributing it to soft prices.
Despite the steel industry’s challenges, iron ore import volumes have remained relatively stable this year. Port inventories have seen a slight decrease after restocking, reaching 150.4 million tons by Aug. 9. China’s iron ore imports increased by 6.7% in the first seven months of the year compared to 2023.
However, with steel output declining and uncertainty surrounding future import volumes, the iron ore market may face challenges ahead. Analysts predict that August’s iron ore imports will remain healthy, but the full-year outlook remains uncertain.
In conclusion, the ongoing struggles in the Chinese steel sector are impacting iron ore prices and import volumes. Investors and traders should closely monitor market developments to make informed decisions about their investments in the iron ore sector.