In news, it’s all about greening:

China’s iron ore supply is expected to be abundant, as demand will decline with Beijing’s steel output cut while supply may incline among the overseas miners, Wang Yingsheng, deputy secretary general of China Iron and Steel Association (CISA), shared on March 25 at the 2021 International Iron Ore Market Seminar in Qingdao, East China’s Shandong province.

In late January, Beijing vowed to bring down crude steel output on year for 2021 while the country’s steel production grew 12.9% on year to 175 million tonnes over January-February. “For the remaining nine months of 2021, we will have to lose the 30 million tonnes at least…

That’s why steel prices are up as well as high-grade iron ore while lower grades are struggling.

It remains to be seen whether or not it can lower the overall iron ore price deck. I am skeptical. The better margins mills have the more they will restock raw materials amid still moderate inventories, offsetting lower steel output.

I prefer to look to the underlying drivers of supply and demand as the sustainable price movers so I still see a decent year with adjustments down in May and September for the price deck.

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David Llewellyn-Smith

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.

He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.

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