This trend has been driven by sustained demand from China, a key player on the global metals market. In the first eight months of 2023, China imported 776 million tonnes of iron ore, up 7.4% from a year earlier, while the price dropped 3.6% YoY
to CNY 783.6, or c. $108, per tonne.
China’s imports are on the rise amid headwinds in its steel industry,
which is still struggling with output restrictions. Against all odds, the blast furnace capacity utilization rate among domestic steelmakers hit a 2.5-year high of 92.27% in late August,
while imported iron ore inventories in Chinese ports, according to Mysteel’s tracking,
plunged to 118.7 million tonnes in early September, the lowest level since the same month three years ago, indicating strong demand from the metals sector. Another factor prompting an increase in iron ore purchases from abroad was torrential rain and floods in northern China, which wreaked havoc with local supply chains.
At the same time, China’s steel output is expected to decline in the near term, leading to a surplus of iron ore on the market. With that in mind, Goldman Sachs has trimmed its iron ore price forecast for the second half of 2023 to $90 per tonne.
S&P Global also projects a downward trend, albeit not as sharp, with prices to land at $105 in September and $94 in Q4 2023. So by the looks of it, a tonne of iron ore this year may cost 108.9 on average.