Decline in Iron Ore Prices Driven by Concerns Over China Demand
Iron ore futures have declined for a fourth consecutive session due to concerns about demand from China, further exacerbated by recent EU steel import quota restrictions. In related commodities, prices also fell, reflecting a bearish outlook in the steel market. The forecast for total steel demand in China indicates potential decreases in the near future due to various economic factors.
Iron ore futures experienced a decline for the fourth consecutive session on Thursday, primarily due to ongoing concerns regarding demand for this essential steelmaking component from China, the leading consumer. The Dalian Commodity Exchange reported that the May iron ore contract decreased by 1.18%, settling at 756.5 yuan ($104.60) per metric ton, marking its lowest value since January 10.
Additionally, the benchmark April iron ore on the Singapore Exchange saw a 0.45% drop, reaching $99.80 per ton, the lowest level since March 12. These declines come in conjunction with the European Union’s recent decision to tighten steel import quotas, limiting inflows by an additional 15% starting in April; this act is intended to prevent the influx of cheap steel into the European market following new tariffs imposed by the United States.
These protective measures by various nations could restrain China’s steel exports for the year, thereby exerting pressure on steel prices and consequently diminishing the demand for iron ore and related feedstocks. The downward trend in iron ore prices continued despite Mineral Resources temporarily halting haulage at its Onslow Iron project in Western Australia due to a recent accident.
Moreover, reductions were observed in other steel-making components on the Dalian Commodity Exchange, with coking coal and coke prices decreasing by 0.73% and 1.33%, respectively. This bearish sentiment was echoed in the Shanghai Futures Exchange, where most steel benchmarks fell, including rebar and hot-rolled coil.
Forecasts by Citigroup indicate a potential decrease in steel demand from China’s property sector and exports by 10% and 4%-5% for 2025 respectively, while the total steel demand for this year could contract by 5%-6%, albeit partially counterbalanced by increased demand from the home appliances and automotive industries.
In summary, iron ore prices have fallen due to escalating concerns about demand from China amidst a global trade conflict. The tightening of steel import quotas by the EU and various domestic forecasts suggest a potential decline in China’s steel demand, which may adversely impact iron ore requirements. The market continues to grapple with uncertainty in demand dynamics as geopolitical factors play a crucial role in influencing commodity prices.
Original Source: www.tradingview.com
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