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| iron ore |
Weak Chinese Demand and Economic Policies Impact Market
Global iron ore prices declined in early March due to weak demand from China. According to Kallanish, between February 28 and March 7, the cost of Fe 58 iron ore delivered by sea to Chinese ports fell from $92/t to $89/t CNF Qingdao. Similarly, MetalPlace reported that Fe 62 iron ore concentrate prices dropped by 3.3% to $101.5/t CNF Qingdao in the first 10 days of March.
This price drop coincided with an 8.4% year-on-year decline in China’s iron ore imports in January-February, totaling 191.36 million tons, as per Chinese customs data. Additionally, China’s steel production in January fell by 5.6% year-on-year to 81.9 million tons. The market downturn was exacerbated by stockpiles accumulated by Chinese steelmakers in December, further reducing demand.
Investor sentiment weakened following key economic decisions announced at the National People’s Congress in early March. The government’s approval of a 1.3 trillion yuan ultra-long-term special bond issuance, along with an additional 500 billion yuan special bond, was lower than market expectations. Analysts believe this signals reduced investment in infrastructure and steel-intensive industries.
China’s real estate market remains a key concern, with unsold housing volume increasing by 16% in 2024 to 391 million square meters. This downturn limits the potential recovery of iron ore demand.
Market Outlook: Potential Rebound in Late March
Market participants anticipate a rebound in iron ore demand by the end of March and in April as the construction season begins. This seasonal trend may drive a short-term recovery in iron ore prices.
The declining price trend also affects the profitability of Ukrainian iron ore producers, as China’s raw material costs serve as a global benchmark. Meanwhile, discussions at the National People’s Congress on March 5 included plans to cut steel production, though no specific targets were set. Industry speculation suggests potential steel production cuts of up to 50 million tons per year.
