In the second half of October, iron ore prices remained under pressure, and since mid-month they have already fallen below $90/t.
In particular, on October 15, iron ore futures on the Singapore Exchange fell to $89.75/t (for the first time since September 2024), and on October 27 they dropped to $89.25/t during the day.
According to Kallanish, the price of iron ore (KORE 62% Fe/Qingdao) stood at $90.3/t CFR as of October 27. Over the month (compared to August 25), it decreased by 6.1%.
Analysts note that the iron ore market is currently being pressured by weak demand in China and an expected increase in the supply of this raw material. A seasonal decline in steel consumption in the last two months of the year, which the country is approaching, low steelmakers’ margins and significant port inventories are holding back purchases. An additional negative factor is the deterioration of expectations regarding the global economy amid high oil prices.
At the same time, leading global producers are maintaining their ore production and shipment volumes, while the ramp-up of production at the Simandou project in Guinea is increasing future supply.
The easing of risks of ore supply disruptions after agreements were reached between China Mineral Resources Group (CMRG) and several major mining companies is also reducing support for prices. In particular, it was recently reported that Rio Tinto and CMRG eventually concluded a long-term supply agreement. The contract covers the period from November of this year to May 2028.
Market participants, in turn, also allow for a further decline in iron ore futures in November. In their opinion, weak demand and China’s policy of limiting steel production will hold back the recovery in consumption of this raw material.
As a reminder, in early October, the iron ore market in China was characterized by moderate post-holiday demand. Overall, an increase in the supply of this raw material was expected in the fourth quarter, which would put pressure on prices.
Courtesy: https://gmk.center/en