Iron ore slumped to its lowest level since 2022 and traded near $90 a ton as China’s main steel industry group advised mills to be cautious in boosting output too quickly to avoid snuffing out a post-summer recovery.
The steelmaking material has fallen by more than a third this year, with prices coming under severe pressure as flagging steel consumption batters loss-making Chinese mills. Steel buying typically picks up after the summer, which will provide a fresh test for producers.
“There will be a certain degree of recovery in steel demand through September and October, which is favorable for the steel market,” the China Iron & Steel Association said in a note, after meeting with steel producers in the south of the country. “However, we need to be cautious of the impulse to restart production,” the association said, “otherwise any improvement in the situation will end up a flash in a pan.”
China’s steelmakers are battling a crisis as the nation’s years-long property crunch wipes out a swathe of demand, creating fierce competition and a glut of the metal. This has created a “challenging environment for iron ore” in the near term, Goldman Sachs Group Inc. said in a note earlier this week.
Iron ore futures in Singapore fell as much as 2% to $90.70 a ton, the lowest since November 2022. They traded at $90.85 a ton by 11:51 a.m. local time, down around 10% this week.
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