Iron ore

The dynamics of commodity prices remains weak

In the second quarter of 2024, iron ore reserves in Chinese ports could rise to 150 million tons, despite the current high supply. This is reported by BigMint.

The overall dynamics of iron ore prices remained weak this week, but their decline slowed significantly. In the context of a weak recovery in steel demand, the market has always supported the containment of steelmakers’ profits.

Some steel mills reported no improvement in their actual financial position since the beginning of the year. In addition, several companies have issued «price support statements» to urge them not to reduce the selling price of steel products. Plants in Yunnan, Guizhou and other regions with relatively high production costs began to cooperate in reducing production. Pig iron production did not increase as usual after the holidays, but rather decreased. There is no sign of a sustainable recovery in the short term.

A prerequisite for the reduction of ore stocks in ports is that pig iron production returns to over 2.35 million tons per day. As of this week, these stocks reached 141 million tons.

However, in the first half of the year, during the period of weak domestic demand and insufficient elasticity of the external market, the gradual supply pressure is sufficient to threaten the basic indicators of iron ore.

In January-February 2024, China increased its iron ore imports by 8.1% y/y – to 209.45 million tons.

As GMK Center reported earlier, May iron ore futures, which are the most traded on the Dalian Commodity Exchange, fell by 8.9% week-on-week – to RMB 807.5/t ($112.29/t) for the period of March 6-13, 2024. On the Singapore Exchange, quotes for April benchmark futures as of March 13 decreased by 10.8% compared to the price a week earlier to $103.45/t. As a result, prices for raw materials fell to their lowest level since August 2023.