Iron Ore Retreats as Shipments, Market Balance Take Spotlight

Iron ore futures fell in China as investors weighed export data from top shippers as stockpiles of the steel-making material remained elevated.

Goldman Sachs Group Inc. expects the market to enter a surplus in the second half of the year on higher Brazilian exports, bank analysts wrote in a note, adding they see prices falling back to $110 a ton by the fourth quarter and to below $100 in 2022.

There have been signs of improved cargoes from the major shippers and investors will get an update on the supply outlook when producers, including Rio Tinto Group and BHP Group, report quarterly production next week. Port stockpiles in China continued to hold near the highest level since May 2019.

In the near term, ongoing strong demand from China and recent mill margin strength “should limit the sustainability of any iron ore sell-off in the next few months,” according to Goldman.

Iron ore futures in Dalian fell as much as 1.5% before trading 1.1% lower at 1,011.5 yuan a ton by 10:05 a.m. Shanghai time. Futures in Singapore were little changed at $166.20. Rebar and hot-rolled coil futures in Shanghai both jumped 0.5%.

In Brazil, daily average iron ore exports were 1.32 million tons in the first six business days of April, compared with 1.2 million in the same period last year. That’s also higher than the daily average of 1.24 million tons in March. Flows from Australia’s Port Hedland rose to a nine-month high in March.

Consumption in China, the world’s top steel market, remains robust as imports topped 100 million tons for the first time since October.