Iron ore prices likely to remain volatile according to ING
September 18, 2024
In the latest Industrial Metals Monthly report — an overview focused on industrial metals such as iron ore, copper and aluminium — ING THINK focused on the poor performance of iron ore and why it seems likely to continue a downward trajectory for the rest of 2024.
“Iron ore is one of the worst-performing commodities so far this year, with prices now down about 33% year-to-date and sinking below $90 for the first time since 2022,” stated Ewa Manthey, ING Commodities Strategist. “We believe price risks are increasingly skewed to the downside for the industrial metal as the outlook in China, the biggest buyer, continues to deteriorate.
Manthey expects iron ore prices to fall further, with both prices and supply/demand largely driven by China’s steel demand, which is centred around a collapsing property market. The official PMI declined month on month and has not reached growth numbers since April 2023.
Oversupply against dwindling demand
On the supply side, iron ore production from the top iron ore producers – Vale, Rio Tinto, BHP and Fortescue – reached 259 million tons in the first half of the year, up year on year.
Chinese iron ore port holdings have also risen to their highest ever for the time of year. Iron ore imports have also increased year on year, though this may in fact exceed the demand. This oversupply is likely to put further pressure on prices.
Baowu Steel Group, reputedly the world’s largest steel maker, stated that the steel crisis looming could be worse than those of 2008 and 2015. Without further stimulus measures, Chinese property and construction appears unlikely to recover in the near future, added Industrial Metals Monthly.
“With the recovery path for China still bumpy, we believe iron ore will remain sensitive to Chinese policies. Prices are therefore likely to remain volatile, at least in the short term,” Matthey added. “A further boost for China’s property sector will be crucial in supporting demand. We see prices averaging $100/t in the third quarter and $95 in the fourth quarter, with a 2024 average of $106/t.”
The full report is available here.
Download PM Review magazine
