Iron ore prices increased by 4.2% over the past week

Iron ore prices on November 15-22, 2024, showed steady growth on major exchanges, which came as a surprise to market participants. January futures on the Dalian Commodity Exchange rose by 4.2% to $106.06/t, and on the Singapore Exchange – also by 4.2%, to $100.7/t. Despite the positive weekly trend, prices remain lower than at the beginning of the month due to weak fundamentals.

The main catalyst for growth was the expectation of additional economic stimulus in China. The authorities are actively trying to support the weakened real estate sector, which is a key consumer of steel. Although the news of the bankruptcy of the major developer Evergrande was a cause for concern, positive signals such as easing mortgage requirements and financial support for infrastructure projects have strengthened market optimism. Pre-holiday demand from Chinese steelmakers also contributed to the price increase.

At the same time, high iron ore stocks in Chinese ports remain a deterrent. Traders are closely assessing the balance between current demand and significant supplies from leading exporters such as Vale and Rio Tinto, which are steadily maintaining production levels.

At the end of the week, the market lost some momentum due to rising global economic risks, but remained in the upside zone. Iron ore prices are expected to fluctuate in the range of $100-107/t in the near future, depending on the actions of the Chinese government and the dynamics of steel demand. Although the short-term outlook looks positive, the key challenge for the market remains the instability in China’s real estate sector, which limits long-term growth potential.

“We currently do not expect a significant increase in iron ore prices, given the high level of supply and limited prospects for consumption in China. The existing incentives are not enough to drive rapid growth in domestic steel demand, while Chinese producers face restrictive measures in foreign markets. In the future, protectionism towards Chinese steel products may increase even further, given the overcapacity in the Chinese steel industry and the intention of the new US President Donald Trump to impose new duties on China,” said Andriy Glushchenko, GMK Center analyst.

Global agencies have different expectations for iron ore prices in the short and long term, taking into account the dynamics of supply and demand and economic risks in China.

Fitch Ratings forecasts prices for raw materials at $105/t, $90/t – in 2025 and $85/t – in 2026.

Goldman Sachs analysts expect a further decline, predicting $85/t in the fourth quarter of 2024 due to a possible oversupply and a slowdown in steel activity in China.

BMI‘s expectations are $110/t in 2024, $100/t in 2025, and a gradual decline to $78/t by 2033. HSBC Holdings, a British international commercial bank, expects iron ore prices to reach $100/t in 2024. Capital Economics predicts that ore prices will range from $99-100/t.