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.
Demand for metals used in everything from automobiles and skyscrapers to iPhones is slumping more rapidly than expected, prompting a stark turnabout for an industry that just weeks ago was anticipating a rebound.
Over the last 24 hours, three of the most iconic names in American heavy industry told investors that deliveries are waning across all sectors in what may be one of the bleakest indicators yet for the broader economy. U.S. Steel Corp., Alcoa Corp. and Nucor Corp. also cited rising costs for energy and raw materials, as well as persistent supply-chain snarls while reducing quarterly shipment or earnings forecasts.
The cold-water remarks come less than a month after executives, buyers, analysts and traders at the largest steel conference in North America struck an optimistic tone by saying the market was nearing a bottom, indicating signs of a recovery. Steel prices have fallen 45% this year and aluminum is down 18% amid surging inflation, Russia’s war on metals powerhouse Ukraine, and pandemic-fueled lockdowns in China. Metal buyers are so spooked they’re unwilling to book shipments more than a few months out.
“Accelerating market headwinds in the third quarter negatively impacted demand across most end-markets, which is expected to result in lower shipment volumes,” U.S. Steel said Thursday in its most detailed mid-quarter statement on the business in years. “Supply chain issues in automotive and appliance end-markets continue, while containers and packaging has softened, and service center buyers remain on the sidelines.”
The Pittsburgh-based producer is now forecasting adjusted third-quarter earnings before items of about $825 million, more than 10% lower than the average of Wall Street estimates.
Nucor Corp., the largest US steelmaker, on Wednesday sounded alarm bells that shipments of the key metal will be reduced during the current quarter. Later that day, Alcoa warned investors of a pullback in earnings results, saying that raw-material prices remain “stubbornly high” even as metal prices continue to fall.
US Steel fell 1.%5 to $20.13 at 11:05 a.m. in New York, extending the year-to-date loss to 16%. Nucor and Alcoa were down 1.1% and 1.3%, respectively.
(By Joe Deaux)
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