Iron Ore Prices Show Signs of a Rebound in Price...

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Iron Ore Prices Show Signs Of Rebound


Iron ore prices see potential rebound in price, following anticipated improvement to Chinese steelmaking production volumes.

  • Chinese steel producers seen to restock iron ore supplies for Winter
  • May 2021 iron ore prices at highs of US $229.5 per tonne
  • Recent iron ore price lows of US $84.61 per tonne

Global iron ore prices have seen an incredible dip from highs of US $229.5 per tonne in May this year, influenced in most part by steelmaking legislation from Beijing. Externally, a global push towards industrial decarbonisation also factors into the cooling of demand for Chinese steel manufacturing, as well as for its associated ingredients which primarily include iron ore. While the dip in iron ore prices have continued its plunge since May, recent lows of US $84.61 per tonne display an indication of a possible rebound in price, with expectations of improving demand for steel production to come.

The iron ore price climb to peaks of US $200 per tonne earlier in the first half of 2021 can be attributed to a correlating surge in demand for Chinese steel production. Speculators and analysts have cited this period of increased construction activity as a hedge against negative pandemic economic effects upon the Chinese economy. While this certainly drove the iron ore price to monumental highs, geopolitical and domestic policy developments soon triggered its eventual freefall from 19 July.

The wider global incentive towards industrial decarbonisation plays a factor into part of Beijing’s decision making surrounding its cooling of domestic steel production. Beijing’s leadership seeks to provide ‘Olympic blue skies’ for athletes and attendees during the upcoming Beijing Winter Olympics in February 2022, and seeks to achieve this by curbing Chinese industrial steel output. Additionally, still-ongoing geo-political tensions involving Australia have resulted in China’s unofficial ban on Australian coal imports — a move which has lately proved ineffective, especially with reports of Chinese ports quietly unloading dockside stockpiles of coal from Australian vessels.

In the latest development to this tumultuous relationship involving the two countries, news of a looking energy crunch ahead of Winter, and speculations of increased steel production activity after the Winter Olympics lead speculators to believe a rebound to iron ore prices could be underway.

Iron Ore Prices Return to the US $100 Mark

Despite strict steel production curbs imposed domestically throughout this year, market experts note recent price activity as a sign of improving demand for Chinese steel production. Reaching highs of US $100 this week, market sources attribute this price activity to growing demand for steel products such as rebar, wire rod and hot-rolled coils. A quick look at Australian iron ore producer BHP Group Limited’s (ASX:BHP) performance over the last 5 days reveals a similar price movement, with its share price up 0.61 per cent. Impressively, this improved demand for iron ore gains traction despite ongoing defaulting concerns associated with prominent Chinese property developers.

While news of potential defaults by Evergrande China and associated development businesses have applied continued pressure on iron ore and steel prices, Chinese steel mills are expected to increase their production volumes just before the start of 2022. Beijing’s mandate to keep the skies blue and air fresh over the Winter Olympic event is expected to remain in place, yet it remains to be seen what effect these curbs will continue to have, long after the last athletes have departed from the country. As Chinese steelmakers begin to restock their iron ore supplies for winter, all that remains is a significant market catalyst to boost the iron ore price further up into 2022.

Louis Mosmann

Louis Mosmann is a Private Wealth Client and Research Assistant at KOSEC- Kodari Securities. Louis covers macroeconomic events, global markets and ASX300 company announcements, allowing clients to make more informed investment decisions. Email Louis at

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