National Bank expects a decrease in prices for steel and iron ore in 2023

According to NBU estimates, average billet prices will decrease by 6.2% y/y – to $579.6/t, for iron ore – by 6.7% y/y, to $113.3/t

National Bank of Ukraine (NBU) expects steel billet prices to decline by an average of 6.2% in 2023 – to $579.6 per ton (on FOB Ukraine terms). Forecasts for 2024 and 2025 are at $549.3/t (-5.2% y/y) and $497.2/t (-9.5% y/y), respectively.

This is stated in NBU’s medium-term macro forecast.

The document states that the average FOB Ukraine billet price in 2022 was up to $618.1 per ton, which is 0.5% higher than in 2021.

The National Bank also gives its forecast estimates for iron ore prices on the terms of China 62% Fe:

• 2023 – $113.3/t (-6.7% y/y);
• 2024 – $82.8/t (-26.9% y/y);
• 2025 – $74.7/t (-9.8% y/y).

The average price of iron ore on China 62% Fe terms in 2022 was up to $121.4 per ton, which is 24.9% less than the average level in 2021.

The NBU forecast is based on the assumption that active hostilities will continue until mid-2024, when the seaports will be unblocked.

At present, prices for iron and steel products show multidirectional trends. In particular, September iron ore futures on July 28 – August 4, 2023, fell by 5.1% – to $112.7/t due to the threat of limiting steel production in China and the lack of economic incentives from the country’s authorities.

In the same time rebar quotations in Europe remained stable throughout July. Some producers tried to raise prices, but the market did not support this trend. Prices are expected to remain stable and trading volumes low until mid-August, when producers return after a hiatus.

As GMK Center reported earlier, the agency Fitch Ratings in June revised iron ore price forecast in 2023 upwards to $105/t compared to $100/t in the previous forecast. For 2024-2026 forecasts remained unchanged at $85/t, $75/t and $70/t, respectively.