Future iron ore prices reached 660 yuan (approximately $93) per ton on Tuesday, marking a new decline to the lowest level in four years. This price drop has occurred due to signs of increased global supply and a negative demand outlook in the global market.
Demand Situation in China
China is entering a weaker seasonal period for steel consumption. This is impacting steel demand due to rising oil prices and concerns related to the global economic outlook. Additionally, declining profitability among Chinese steel producers has put pressure on demand expectations. According to industry data, the operating rate of blast furnaces in 247 steel mills in China reached 80% last week, indicating a 4.3% decrease compared to the same period last year.
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Supply and Production
On the supply side, attacks from four major iron ore producers, including Rio Tinto and BHP Group, are expected to increase by nearly 20 million tons in the fourth quarter of this year. Additionally, the Simandou mine in Guinea continues its production and is expanding its capacity. These factors indicate greater risks for iron ore prices in the near future.
Overall, the current state of the iron ore market has created new challenges for producers and consumers due to an imbalance between supply and demand. Market experts expect this trend to continue in the short term and it may lead to further price declines.
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