The iron market in search of a signal from Beijing

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Since its plummet in the summer, iron ore has struggled to rise and has hovered around $ 100 per tonne. A low price which worries the exporting countries which see their receipts decrease.

Iron ore at $ 100 a tonne is problematic, but complicated to analyze because too many factors interfere, sums up a trader. But the situation is however not surprising, specifies an African miner, because nobody expected that the post-first containment record prices – with an iron at 220 dollars per tonne – to be maintained.

The fall in prices began this summer and coincides with the decision of the Middle Kingdom to slow down its steel production to limit pollution. As iron is fired with coal in China to be processed and added to other components to form steel, it is one of the country’s highly polluting industries. Incompatible with the energy goals that Beijing has set for itself.

In Europe, iron is the victim of a gloomy automotive sector

However, China, which produces more than half of the world’s steel, imports nearly 70% of the iron that circulates by ship. When Chinese steel mills resumed their activity at the end of 2020, they were the ones who drove prices up. The reverse is true: by slowing down, steel mills have fewer needs and orders fall.

To this must be added a drop in demand in Europe. Factories reduced their production, especially in the automotive sector, the demand for flat products, sheet metal decreased. If the auto sector does not pick up and if the Chinese steel mills prolong their dry regime, the exporting countries will start to look gloomy.

Producers are watching for a recovery in Chinese steel mill activity

On the African continent, South Africa and Mauritania could suffer the most from a drop in iron ore prices over time. Elsewhere in the world, Australia and Brazil, which are the biggest exporters, are obviously concerned. ” Our sun is rising in China Today, sums up a player in the sector, who is impatiently awaiting a signal from Beijing, the great master on the iron market.

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