The decrease in iron ore and steel prices in China is clearly due to the reopening of markets after the national holidays in the country. The price of iron ore on the Dalian Commodity Exchange (DCE) reached 682.5 yuan per ton, which is a 2.85% decrease compared to before the holidays. These changes clearly indicate weak expectations for demand in the domestic market.
Details of Price Changes
In this context, the price of iron ore in Qingdao also faced a decrease of 15 yuan per ton, and PB Lump iron ore decreased by 17 yuan compared to before the holidays. Additionally, the price index for iron ore with a grade of 61% has dropped to $90.35 and to $109.45 per ton for a grade of 65%. Although factory requests have resumed, reports indicate that pressure on offers continues, and only limited transactions are taking place in the market.
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Pressure on Demand and Future Predictions
The market situation is such that the decrease in prices has not yet been able to attract stronger demand. Given the price reductions, costs act as a barrier. On October 8, a report from SMM confirmed that the first round of price reductions for coke purchases has been implemented since October 1, with a decrease of 100 yuan per ton for wet coke and 110 yuan for dry coke. These changes could improve the cost conditions for factories and traders, but the restoration of real margins depends on the relative movements of final steel prices, iron ore prices, and exchange rates.
As factories continue to control inputs and only purchase according to their immediate needs, the response of demand to cost reductions may take time. In the short term, the question is whether the trade and production market will respond to price changes or not. Meanwhile, global shipments remain at a relatively high level, and storage conditions and hot metal limit demand expectations.
Domestic concentrated resources, which are under significant pressure, can provide support, but factory pressure on offers continues. Prices may remain soft and within a range. Sustainable reconstruction after margin improvement could create a price floor; however, if the recovery of transactions is limited, the pressure from incoming supplies may continue to dominate the market.
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