News
November 19
While there are some fundamental factors that help explain the seeming contradiction between robust iron ore demand and softness in the product it is used to produce, the main difference is probably sentiment.
Iron ore is being driven by the view among market participants that Beijing will continue to stimulate the world’s second-largest economy, and ultimately that steel demand will recover.
The decline in steel production comes as mills struggle to remain profitable amid higher input costs and muted demand from the key construction sector.
China, which produces more than half of global steel, recorded output of 72.0 million tons in October, down 2% from September and 12.1% from the same month in 2024, according to data released on November 14.
For the first 10 months of the year steel production was 817.87 million tons, down 3.9% from the same period last year.
It also means that to achieve 1 billion tons of output this year, production in the last two months of the year would have to be 182.13 million tons, or about 91 million tons in both November and December.
It is more likely that output will not exceed 75 million tons in each of the last two months of the year, meaning annual production is on track to be around 970 million tons.
Steel production was last below 1 billion tons in 2019, when it was 996 million tons.
However, iron ore imports are on track to eclipse last year’s record high of 1.24 billion tons achieved in 2024.
For the first 10 months of the year iron ore imports were 1.03 billion tons, meaning that if arrivals in the last two months of the year exceed 210 million tons, a new record will be set.
November imports are already looking strong, with analysts at DBX Commodities estimating arrivals at 116.5 million tons, while Kpler is even more bullish with a forecast of 120.6 million tons.
The question is why are iron ore imports so strong when the steel sector is so obviously struggling.
