Iron ore price down despite China’s move to ease covid curbs

Iron ore price fell again on Wednesday, unable to escape the broader sell-off in commodities.

According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were changing hands for $123.65 a tonne, down 1% from Tuesday’s closing.
While covid-19 concerns may be fading away and China has reiterated its promise to continue rolling out policy support for its struggling economy, a sustainable rally for the country’s ferrous complex remains uncertain.

Beijing is ruling out flood-like stimulus and has not indicated specific measures and a timeframe for any action.

“The medium to long-term outlook is more bearish,” said strategists at ING.

“While we expect iron ore prices to be supported in 2H22 due to expectations of a recovery in China, the longer-term outlook for iron ore is more bearish. On the demand side, it appears that China will continue to cap crude steel output whilst also looking to replace older steel capacity with electric arc furnace capacity in order to help the country meet its decarbonisation goals. We have already seen China’s iron ore imports peak in 2020.”