Iron ore prices retreated again on Monday on rising supply and steel output control in China.
According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were changing hands for $136.71 a tonne, down 2.8% from Friday’s closing.
Supply from Australia has been steady as the impact of earlier weather-related disruptions faded, while Brazil’s shipments are starting to trend higher as the country’s output recovers from the effects of the coronavirus pandemic.
Meanwhile, it seems clear that China’s instruction that steel production for 2021 shouldn’t exceed the record 1.065 billion tonnes from 2020 is finally being heeded.
July crude steel output fell to the lowest since April 2020, coming in at 86.79 million tonnes, down 7.6% from June.
Pressured by rising supply and cuts in steel production, iron ore has fallen roughly 40% since mid-July.
“Iron ore hasn’t fallen this far this fast since spot prices were established for the commodity roughly 13 years ago,” Morgan Stanley said.
Official data also shows that the Chinese economy is slowing more generally, particularly in property and infrastructure.
“The infrastructure and property sectors account for 20-25% and 25-30% of China’s steel demand respectively,” noted Commonwealth Bank commodities analyst Vivek Dhar.
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