A report by Business Monitor International (BMI) reveals that blast furnace steel production and iron ore demand remain strong, despite China's unsteady economic growth and the failure of its real estate sector.
From January to October, China produced 874 million tons of crude steel, up 1.4% year-on-year. The outlook for 2024 is positive, but the long-term trend is expected to decline. Outside China, steel production and iron ore demand showed signs of recovery, with global crude steel production rising by 0.6% in October.
Major iron ore producers reported strong production growth and expressed positive expectations for 2024. However, iron ore prices are likely to remain on a steady downward trend as steel output growth stalls and global mills produce higher output.
BMI forecasts prices to fall from an average of $110 per tonne this year to $80 in five years. Slowing demand growth in China and a shift away from steel-intensive industries will contribute to this decline. The global focus on green steel also poses downside risks to iron ore demand. Global miners are expected to increase production at an average growth rate of 2.25% from this year to 2027.
The report notes that risks to the price outlook remain due to volatile economic conditions. A stronger recovery in China's real estate sector or major stimulus policies could boost iron ore prices, while weak economic momentum could push prices down further.
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