Iron ore weakness to continue into 2025 and beyond, says Fitch Solutions’ BMI
Looking beyond 2024-2025, BMI analysts maintained their view that iron ore prices will likely follow a multi-year downtrend.
Iron ore futures in China, the world’s top buyer of the steelmaking raw material, hit a nearly three-week low on Tuesday after Brazilian miner Vale SA reported higher output in the third quarter.
Concerns about iron ore demand slowing in China, which makes about half of the world’s steel output, due to its renewed efforts to curb pollution by restricting steel mills operations in some areas also weighed on prices.
Improving iron ore supply from Brazil and Australia has pushed port inventory in China to a five-month high of 129.95 million tonnes
Dalian Commodity Exchange’s most-traded iron ore contract ended down 1.2% at 644 yuan ($91.05) a tonne, after falling as much as 3.3% earlier in the session to its weakest since Sept. 26.
Vale, the world’s top iron ore exporter and China’s major source of high-grade material, on Monday reported a 35.4% quarter-on-quarter jump in output to 86.7 million tonnes in the July-September period.
A deadly tailings dam burst at Vale’s Brumadinho complex in January prompted several dam and mine shutdowns for safety checks, tightening global supply and pushing iron ore prices to five-year peaks.
Spot 62% iron ore benchmark, which was steady at $92.50 a tonne on Monday, is still up 15% this year despite a 27% slump from its July 3 peak of $126.50 amid easing supply concerns, based on SteelHome consultancy data.
Improving iron ore supply from Brazil and Australia has pushed port inventory in China to a five-month high of 129.95 million tonnes, latest SteelHome estimates showed.
That improvement was reflected in China’s iron ore imports, which rose for a third straight month in September to a 20-month high, according to customs data released on Monday.
“For 2020, Vale expects to produce an additional 30 Mt (million tonnes) from the halted operations related to the Brumadinho tragedy,” the miner said.
Vale also said it expects to lift production capacity to around 50 million tonnes at its Vargem Grande complex by the end of 2021.
Other steelmaking raw materials also slumped, with Dalian coke closing down 2.3% at 1,809.50 yuan a tonne, after falling as much as 4.5% earlier in the session to its lowest since Dec. 3, 2018.
Dalian coking coal edged down 0.4% to 1,242 yuan a tonne.
Steel futures stretched losses after industry data released on Monday showed auto sales in China fell for a 15th consecutive month in September, dampening hopes for a second-half turnaround.
The most-traded construction steel rebar contract on the Shanghai Futures Exchange fell 1.7% to 3,346 yuan a tonne, its weakest close since Aug. 30 this year.
Hot-rolled steel coil, used in cars and home appliances, dipped 1.3% to 3,331 yuan a tonne, its lowest finish since April 3 this year.
Stainless steel, made from nickel pig iron, declined 2.1% to 15,440 yuan a tonne, tracking Shanghai nickel’s sharp fall.
($1 = 7.0728 yuan)
(By Enrico dela Cruz; Editing by Rashmi Aich)
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