BLOG: How much further can iron ore price drop?
A U.S.-based contact shared his iron ore price projection at $80-100/dmt CFR China in the near term, which personally I feel unlikely, unless the country's domestic steel prices will be falling in parallel.
By the first week after the Chinese New Year (CNY) holiday in 2022, though, China's rebar price, for example, surpassed Yuan 5,000/t again, or the first time in three months, suggesting the overall optimism in the domestic steel market.
Product |
1st week after CNY in 2022 |
1st week after CNY in 2021 |
1st week after CNY in 2020 |
Rebar stocks in 35 Chinese cities (million t) |
7.85 |
10.09 |
8.51 |
HRC stocks in 33 Chinese cities (million t) |
2.71 |
2.61 |
2.54 |
Iron ore stocks at 45 Chinese ports (million t) |
158.89 |
127.07 |
125.57 |
|
|
|
|
HRB400E 20mm dia rebar price (national average) |
Yuan 5,032/t |
Yuan 4,554/t |
Yuan 3,784/t |
4.75mm HRC price (national average) |
Yuan 5,125/t |
Yuan 4,700/t |
Yuan 3,674/t |
Mysteel SEADEX 62% Australian Fines (CFR Qingdao) |
$150.2/dmt |
$172.35/dmt |
$82.85/dmt |
A Comparison of the various prices and major steel product stocks for the first week after the CNY holiday over 2020-2022 have highlighted some interesting points, such as that China's rebar stocks, for example, has been about 20% lower on year for 2022, which has been supportive to an about 10% on-year rise in rebar price especially when the country's steel demand is expected to be robust in the first quarter with some infrastructure projects brought forward.
On the other hand, China's iron ore port stocks have been about 25% higher on year, while iron ore price was about 13% down on year, and possible continuing declines, to some extent, can be expected in the near term from the perspective of fundamentals, though in reality, it very much depends on actual demand for iron ore, the domestic steel price movement in the coming days, and how seriously Beijing will crack down on seaborne iron ore prices.
For now, China's steel fundamentals are still filled with mixed signals, which, naturally, has led to the divided opinions on the market outlook, according to market sources.
On the one hand, steel demand is expected to improve in Q1 while steel output had been declining over January 20-February 10, Mysteel's regular survey among the 247 Chinese blast-furnace and 71 electric-arc-furnace steel mills showed.
On the other hand, Beijing has been reiterating the necessity of maintaining stability in the supplies and prices of bulk commodities including coal and probably steel, and iron ore.
Written by Hongmei Li, li.hongmei@mysteel.com
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