The iron ore price complex was mixed on March 24, 2021 with spot prices down but paper prices jumping overnight. Steel has not updated:
I think we have our answer here in terms of whether or not environmental restrictions will crash iron ore prices in the short term and it is “no”. The thing is, lifting the steel price by cutting production delivers better margins to mills and they up output plus restock raw materials.
There are 864 words left in this subscriber-only article.
Start your free 14-day trial today!
So, I remain of the view that 2021 prices will revolve around three key factors:
- Chinese retocking which is now strengthening.
- Normalisation of global supply which is happening and will accelerate.
- Fading Chinese demand as it tightens and catch-up growth passes.
The first is bullish which is why I still expect firm pricing in normal seasonal patterns.
The second two are bearish and will get much worse as the year deepens so I also expect big steps down in the price deck in May and September, the seasonal weak spots.
On that, Tonkolili is back:
The New Tonkolili Iron Ore Project, a Chinese-funded iron ore project in Sierra Leone said to be the world’s largest single magnetite mine, has commenced full-scale operations, according to a Xinhua post on March 20.
Does anyone know what “full production” is these days? It used to be a big mine at 15-18mt but I can’t kind anything on volumes for this new iteration.
Anyway, it is another signal that current crazy prices will restore masses of brownfields iron ore in due course.
There is no supercycle driver here!