Recent Trends in Iron Ore Prices

 

Recent Trends in Iron Ore Prices

Declining Iron Ore Prices

Recently, domestic iron ore prices have fluctuated and fallen. On June 5, prices continued their downward trend. At Rizhao Port, the price of 61.5% grade PB powder was 825 yuan/ton, a drop of 5 yuan/ton from the previous day. The price of 61% grade Mike powder was 805 yuan/ton, down 10 yuan/ton. At Qingdao Port, 61.5% grade PB powder was also 825 yuan/ton, down 10 yuan/ton, while 61% grade Mike powder was 800 yuan/ton, down 15 yuan/ton. At Tianjin Port, 61.5% grade PB powder was 850 yuan/ton, down 10 yuan/ton, and super special powder was 685 yuan/ton, down 10 yuan/ton. Overall, imported iron ore prices fell by 5 to 15 yuan/ton.

Similarly, domestic iron ore prices dropped. On June 5, the price of 66% acid powder in Tangshan was 820 yuan/ton, a decrease of 10 yuan/ton from the previous day.

Causes of Price Decline

Increased Supply

Industry experts attribute the price decline to supply and demand imbalances. Global iron ore shipments have risen by nearly 10 million tons compared to last year, with significant increases from Brazil and other non-mainstream regions. Consequently, China's iron ore port inventory has grown from 120 million tons at the start of the year to 140 million tons by June 3. Domestic production has also surged. In March, national iron ore production was 98.146 million tons, up 15.47% month-on-month and 13.59% year-on-year. From January to March, production reached 274.006 million tons, an increase of 15.73% year-on-year.

Decreased Demand

On the demand side, the domestic steel market has shown weak demand. Limited steel mill capacity and declining steel production have reduced iron ore consumption. In April, pig iron production was 71.63 million tons, down 8.0% year-on-year, and steel production was 85.94 million tons, down 7.2% year-on-year. From January to April, pig iron output was 284.99 million tons, a decrease of 4.3%, and steel output was 343.67 million tons, down 3.0%. May continued this trend with reduced steel production and iron ore consumption, contributing to lower prices.

Market Outlook

Experts believe the "strong supply and weak demand" pattern will persist. June typically sees lower steel demand, further pressuring prices. For instance, from late May to June 5, hot-rolled coil prices in Shanghai fell by 70 yuan/ton, and cold-rolled coil prices dropped by 30 yuan/ton.

The recent trend indicates a continued decrease in steel production, impacting iron ore demand. The State Council's "2024-2025 Energy Conservation and Carbon Reduction Action Plan" aims to limit steel production capacity, further reducing demand for iron ore. As a result, iron ore prices are unlikely to rebound sharply.

Some analysts predict that iron ore prices may fluctuate, with potential short-term rises followed by declines. For example, the price of 61.5% grade PB powder at Jingtang Port rose from 790 yuan/ton on April 1 to 855 yuan/ton on June 5. Despite occasional recoveries, the overall trend is expected to remain downward due to weaker than expected terminal demand.