The overall market outlook continues to disappoint amid the seasonal slowdown in construction in China over the summer.

September iron ore futures, the most heavily traded on the Dalian Commodity Exchange, for the period from May 19 to May 26, 2023, fell 9.6% from the previous week – to reach 665.5 Yuan/tonne ($96.28/tonne).

On the Singapore Exchange, the prices of the underlying futures contracts for June, as of May 26, 2023, decreased by 5.8% compared to the price a week ago to reach $99.55/tonne.

Iron ore prices returned to the downside after a weeklong recovery reaching $106/tonne in the second fortnight of May, as the market was concerned about the unrealized expectations of steel consumption by China’s real estate sector during peak season. Overall, the short-term outlook for steel demand is disappointing.

With the construction season drawing to a close and steel demand not meeting expectations, coupled with the uneven performance of China’s domestic economy, analysts expect China’s iron ore consumption to remain limited.

Lack of main changes in monetary and fiscal policy, China’s economic cycle is expected to bottom out in the third quarter. Mysteel analysts noted that the negative outlook on the real estate sector is dampening the mood of market participants.

Last week, the Yuan depreciation against the US dollar added to the pressure on the market, sending the Shanghai rebar futures contract to its lowest level in more than six months. The Chinese currency fell to its lowest level in six months amid renewed tensions in Sino-US relations.

The currency weakness also added to concerns about the future earnings of Chinese steelmakers and the smoothness of the economic recovery in the world’s largest economy.

Steel production controlling policy will significantly decrease iron ore demand in the medium run. Sinosteel analysts said that the long-term outlook is somewhat pessimistic.

Iron ore mining in China in April 2023 decreased by 13.1% compared to the previous month to 75.1 million tonnes.

From January to April 2023, iron ore production decreased by 8% compared to the same period in 2022 to reach 314.38 million tonnes.

Imports to China increased 8.6% yearly from January to April, reaching 385 million tonnes.

China imported 90.44 million tonnes of iron ore in April, up 5.1% over April 2022 and 9.8% less than March 2023.