CONF: China's imported iron ore prices may lose 2.5% in 2024

During January-October this year, Mysteel SEADEX 62% Australian Fines averaged $117/dmt CFR Qingdao, and Zhang estimated that the price index would stand at $118/dmt on average for this whole year and may slip by about 2.5% on year to average $115/dmt next year.

Zhang Qiusheng, Chief Analyst of Nanjing Iron and Steel Co

"In 2024, the total iron ore output among the world's top four miners is expected to grow by some 10 million tonnes, while in China, domestic iron ore production will also continue rising steadily with the advancement of the corner stone plan," Zhang said.

On the other hand, Chinese steel mills' hot metal production is likely to decrease under the central government's directive to cut the country's total steel production capacity and promote the low-carbon development of its domestic steel industry, according to Zhang. As such, the iron ore demand may weaken overall next year, which will weigh on the imported ore prices, he predicted.

"China's total crude steel output may post a small decline of 10 million tonnes in 2024," Zhang said. "However, domestic steel supply will still be in excess due to the flat demand from end-users next year," he added, explaining that the country's real estate, vehicle, and home appliance markets may all see sluggish growth in 2024 as the decline of income has made people reluctant to spend money on these goods.

Under such circumstances, domestic prices for steel products will move downward as well in the coming year, Zhang noted. For example, China's average price of rebar is estimated to lose 3.6% on year to Yuan 3,750/tonne ($517.9/t) in 2024, and that for hot-rolled coil may drop 3.5% on year to Yuan 3,900/t, both including the 13% VAT, according to him.

The decline of steel prices may in turn weaken the support for iron ore prices, Zhang pointed out. Besides, "considering that iron ore is a hot commodity in the derivative market, the (Chinese) government's strict regulations will also exert certain pressure on iron ore prices," he added.

Written by Anthea Shi, shihui@mysteel.com

Edited by Alyssa Ren, rentingting@mysteel.com