Iron ore prices are still under pressure from lower demand caused by the weak production of several steel mills in China. This is due to some companies doing maintenance during this period to prevent losses with the markets’ uncertainty.
The steel manufacturers have lost hope in China’s economic recovery and the resumption of the construction season in the country, especially with the rainy season approaching. These factors are working on a decline in steel product consumption and thus reducing the demand for iron ore therefore the outlook for the iron ore market is still not favourable.
Concerns about the impact on steel demand are fuelled by fears of a banking crisis in the US and unrest in the country’s regional banks hampering trade in raw materials and steel. Some steel companies intend to extend the maintenance period, as they do not see the point of resuming production in an environment of low demand.
Iron ore futures contracts on the Dalian Commodity Exchange for April 28-May 5, 2023, increased by 0.2% compared to the previous week.
September iron ore futures, the most heavily traded on the Dalian Commodity Exchange, for April 28-May 5, 2023, rose 0.2% from the previous week to 697.5 Yuan/tonne ($100.93/tonne).
On the Singapore Exchange, futures prices for May 2023 fell 2.7% compared to the April 28 prices to $98/tonne. Meanwhile, at auctions on May 5, iron ore prices fell to $94.2/tonne but then rose slightly.
According to Mysteel, maintenance of 21 blast furnaces is scheduled to stop in May 2023; this will reduce the steel mills’ capacity by 78,000 tonnes/day, while nine blast furnaces will resume production within a month, increasing capacity by 32,000 tonnes/day.
As the iron ore production in China in March 2023 decreased by 5% compared to March 2022, reaching 86.4 million tonnes and the first quarter production remained close to the level of the same period in 2022, with a volume of 243.26 million tonnes.
In March, China imported 100.23 million tons of iron ore, an increase of 10.6% compared to February 2023 and 14.8% compared to March 2022.
Iron ore imports to China also rose 9.8% year-on-year in the first quarter of 2023 to 294.33 million tonnes.