Iron ore prices rose for a week thanks to an increase in steel plants’ production

The January futures price for iron ore on the Dalian Commodity Exchange for the week from August 19 to 26 increased by 1.6%, to 735 yuan/t ($106.07/t according to the NBU rate as of 08/19/2022). Stock price indicator informs about it.

The trend changed (two weeks earlier the iron ore price fell by 6.8%) due to increased production by local steel plants.

“Domestic mills in China don’t have much stocks. Recently, their profit has come back. Production will rise much more as some big mills have not resumed production too quickly before,” one of the market participants commented on the situation, reports Nasdaq.

At the same time, the prospects for steel demand is still uncertain due to the real estate crisis and the impact of heat on manufacturing processes. Therefore, the weekly increase in iron ore prices is insignificant.

Also, local traders expect an increase in demand in September.

“August temperature is very high in China. September demand will be better,” the trader said.

Iron ore stocks at 33 major Chinese ports rose by 0.04% from August 15 to 129 million tons to August 22. However, this index is still significantly lower than the three-month maximum of 138.6 million tons recorded on August 12.

As GMK Center reported earlier, the investment bank Goldman Sachs predicts a drop in the price of ore in the third quarter to $70/t. This forecast is based on the crisis in the Chinese real estate market.

China is the largest producer of steel in the world. In 2021 Chinese steelmakers reduced steel production by 3% compared to 2020, to 1.03 billion tons. In 2022, the country plans to continue reducing production.