Iron ore

On the Singapore Exchange, January iron ore futures as of December 27, 2023, are $140.2/t

May futures for iron ore, the most traded on the Dalian Commodity Exchange, for the period December 20-27, 2023, increased by 4.9% compared to the previous week to 985.5 yuan/t ($137.93/t). This is evidenced by Nasdaq data.

On the Singapore Exchange, quotes for January benchmark futures as of December 27, 2023, increased by 4.6% compared to the price a week earlier – to $140.22/t.

At the same time, according to S&P, iron ore quotations in northern China reached $141.45/t CFR as of December 26.

Over the past seven days, iron ore prices have risen sharply due to optimistic news from Chinese state-owned banks and strong demand. Five of China’s largest banks have cut interest rates on some deposits, which has helped to increase liquidity.

“Chinese steelmakers reacted positively to the news as the authorities seek to boost consumer spending and stimulate credit growth. As the lower boundary of iron ore prices hovers around $136/t, we are likely to see prices rise to $145-158/t in the next quarter,” Atilla Widnell noted, Managing Director of Navigate Commodities.

This outlook is supported by increased production at Chinese blast furnaces, active restocking by Chinese steelmakers ahead of the holidays, and a reduction in sea shipments due to seasonal maintenance programs at global mining companies’ facilities in the first quarter of 2024.

In the coming weeks, the positive trend is expected to continue amid a surge in demand for raw materials as Chinese steel mills replenish their stocks of raw materials to meet production needs during the holiday season.

At the same time, market growth is somewhat limited due to traders’ concerns about Chinese authorities’ interference in price regulation. In addition, several cities in northern China, including the steel center of Tangshan, have announced plans to launch emergency response due to deteriorating air quality.

The rating agency Fitch Ratings recently raised its iron ore price forecast for 2023-2026. The company expects the price of iron ore to be $118/t this year, $95/t in 2024, $80/t – in 2025, and $75/t – in 2026.

Analysts polled by Reuters expect that iron ore quotation in the first half of 2024 may rise to $150/t. BMI raised its forecast for the average price of iron ore next year to $120/t, Goldman Sachs – to $110/t, Wood Mackenzie – to $108/t.

JP Morgan predicted, that in 2023 ore quotations will be $117/t, in 2024 – $110/t, and in 2025 – $105/t.