Iron-Ore Prices to Remain at About $100/t in 2025, BMI Says

SEATTLE (Scrap Monster):  In a market commentary published on November 18, BMI noted that iron-ore (62% iron content) prices at Qingdao port were currently hovering below $100/t at about $95.7/t as of November 8, with the year-to-date average in 2024 thus far being $105/t.

After hitting a multi-year low of $85/t on September 23, prices rebounded sharply to $103/t on September 30, in the wake of Chinese stimulus announcements.

However, the rally proved to be short-lived, with prices trending downwards into early November, struggling to breach the $100/t mark, despite Beijing's efforts to reinvigorate the property sector.

 While better-than-expected manufacturing purchasing managers’ index (PMI) data lent some support to prices, after it returned to expansionary territory in October, persistent weakness in Chinese demand, coupled with rising iron-ore inventories, sustained downward pressure.

BMI expects iron-ore prices to continue to be hit by a weak demand outlook, barring additional support measures from mainland China in the coming months.

The firm said iron-ore prices were likely to remain highly sensitive to potential stimulus announcements, with market sentiment skewed towards expectations of further support in light of anticipated rekindled trade tensions under a second Donald Trump Presidency in the US.

As such, the extent of any provided stimulus would be crucial in determining whether it can turn the tide for the iron-ore market.

On the demand side, steel production in China and thus demand for iron-ore still remain sluggish, with property sector weakness adding to the grim picture.

According to the World Steel Association (worldsteel), during the first nine months of this year, China's production of crude steel declined by 3.6% year-on-year, with production in September having decreased by 6.1% year-on-year.

While China's manufacturing PMI surprised to the upside, returning to an expansionary territory for the first time in six months, registering a reading of 50.1 in October, compared with 49.8 in September, the ongoing property downturn still showed little sign of reversing, BMI said.

During the first nine months of this year, investment in the real estate sector declined by 10.1% year-on-year, after falling by 10.2% over January to August, while new construction floor starts contracted by 22.2% year-on-year from January to September.

BMI noted that the recently unveiled raft of stimulus measures presented an upside. However, the firm’s country risk team highlighted that addressing the property market downturn would be a multiyear effort, given the scale of unfinished projects and unsold housing stock.

The firm added that the growth impact from the debt swap programme announced in November also seemed to be limited, with the country risk team maintaining its real GDP growth forecasts at 4.8% for this year and 4.5% for 2025.

While China's imports of iron-ore remain elevated, rising by 4.9% year-on-year over January to October, with demand turnaround expectations and a lower price environment acting as a tailwind, they were likely adding largely to stocks.

BMI noted a strong build-up of iron-ore inventories at mainland Chinese ports, rising by 31% in the year-to-date to 149.9-million tonnes as of November 8, which has the potential to place a cap on prices in the coming months.

Outside of China, steel production and demand for iron-ore remain muted so far, BMI pointed out.

According to a recent worldsteel report, global crude steel production declined by 1.9% year-on-year over January to September, with September registering a sharp year-on-year decrease of 4.7%.

Steel production in India, Germany, Turkiye and Brazil outperformed, rising by 5.8%, 4%, 13.8% and 4.4% year-on-year, respectively, during the first nine months of this year.

That said, this was offset by steel production downturns in other key markets, including Japan, the US, Russia, South Korea and Iran. During January to September, Japan and the US registered year-on-year steel production growth rates of -3.2% and -1.6%, respectively, while steel production in Russia and South Korea dipped by 5.5% and 4.6% year-on-year, respectively.

On the supply side, iron-ore production remained healthy across major
miners, BMI said.

Iron-ore shipments and production broadly increased for most majors, with miners aiming to maintain their production levels.

Courtesy: www.miningweekly.com