Recent developments in China's iron ore market continue to be shaped by the weakness in supply and demand dynamics and pressures on prices. Although iron ore demand remains relatively stable in the first half of 2024, supply side difficulties and high inventory levels put downward pressure on prices.
Last week, the daily average molten iron production and daily imported ore consumption of sample steel plants increased. However, the loosening of control policies in crude steel production during the off-season period and the losses experienced by steel producers continue to increase the difficulties in the sector.
Iron ore imports to China increased by 52.6% in the first six months of the year compared to the same period last year, reaching USD 5.79 billion. This increase shows that the demand for iron ore from other countries in the region, including Vietnam, is also high. However, the inadequacy of local production capacities to meet this demand increases foreign dependency and causes price fluctuations in the domestic market.
While iron ore stocks in China are still at high levels, this increases the pressure on prices. The Xinhu Futures analyst pointed out that this situation does not support hot metal prices, and downstream digestion capabilities during the off-season are a cause for concern.
On the other hand, benchmark iron ore futures contracts closed at USD 106.79 per tonne, down 0.4% on the Singapore Exchange. On the Dalian Commodity Exchange, the main domestic iron ore contracts closed at Yuan 798.5 (USD 109.73) per ton, decreasing by 0.3% at the end of the day.
Analysts state that iron ore prices are vulnerable to short-term fluctuations and negative factors. These developments in China's iron ore market are expected to continue to affect the overall performance of the sector in the future.
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