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Iron ore prices face a correction

Iron ore prices face a correction

2020-11-02

Iron ore, one of the minerals that have risen sharply this year, is waiting for the market amid high volatility, according to an analysis by China Mining News. In September, as the growth rate of the commodity industry continued to fall, iron ore was under great upward pressure due to the rebound of imports, port inventory accumulation, and slowing demand, etc., and a correction is likely to come later.




Demand expectations are weaker




China's iron ore import prices have risen since April, as steel production has continued to grow. From January to August, China imported 75.9915 million tons of iron ore, up 11% year-on-year. In August, the average price of imported fine ore (62% grade) was US $119.93 / ton, up US $13.4 / ton month-on-month, up 12.6%.




In September, due to lower consumption than expected, steel prices "peak season is not flourishing", consumption although steadily rising, but far lower than market expectations. In September, the steel industry output index was 54%, down 2% month-on-month. Finished material inventory index was 46%, down 4% month-on-month; The raw material inventory index was 46%, down 2% month-on-month.




There was a marginal contraction in iron ore demand. Iron ore sales rose 1.8% month-on-month in September, according to the China Federation of Logistics and Purchasing, but growth slowed by 2.8 percentage points, marking the second month in a row that growth has slowed. This is mainly due to the impact of heating season production limit measures, steel blast furnace operating rate is expected to decline.




For October, the traditional construction season, analysts believe that due to the late real estate investment growth continued upward momentum insufficient, infrastructure investment may be difficult to exceed expectations, construction steel demand release degree remains to be seen, it is expected that the domestic steel market in October will be in a weak shock situation. Overall, the fundamentals of iron ore is weakening, the later demand may appear a significant fall.


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