Iron ore prices are declining: Demand has weakened in China

Iron ore prices in global commodity markets continue their downward trend due to increasing supply and weakening demand expectations. While Australia and Brazil's increase in exports strengthens the supply of stocks in Chinese ports, the downward update of global steel consumption forecasts increases the selling pressure on prices.

As of October 20, the ton price of iron ore in China decreased by 0.22 percent to 681 yuan. The commodity, which recorded a decrease of 1.50 yuan on a daily basis, lost 4.76 percent in value in the last month and 11.84 percent on an annual basis.

The decline in prices in the futures market below the 680 yuan level brought iron ore prices close to the lowest levels in the last four years. The projected average price for the last quarter of the year is around 664.49 yuan per ton.

GLOBAL IRON ORE SHIPMENTS INCREASED

Data from international markets reveal the expansion in iron ore supply. Global shipments in the week ending October 18 increased by 3.89 million tonnes to 34.77 million tonnes compared to the previous week.

The export performance of Australia and Brazil stood out in the increase in supply. The total weekly iron ore exports of the two countries reached 29.82 million tons, with an increase of 4.79 million tons.

The acceleration in exports was also reflected in the amount of raw materials reaching ports in China. The volume of iron ore entering the country's 47 major ports increased by 2.73 million tons on a weekly basis, reaching 28.35 million tons. Thus, while the supply of raw materials in the Chinese market expanded, the conditions that made it difficult for prices to recover were strengthened.

WORLD STEEL ASSOCIATION REDUCED ITS 2026 CONSUMPTION FORECAST

Another important reason for the decline in iron ore prices was the weakening of expectations regarding global steel demand. The World Steel Association revised its 2026 global steel consumption forecast downwards.

In its assessment published in April, the organization expected global steel demand to increase by 0.3 percent. In his last forecast, he predicted that consumption would decrease by 0.1 percent. Thus, the expectation of growth was replaced by the expectation of contraction.

The deterioration in the demand outlook is due to the weak performance of the real estate and construction sectors in China, the world's largest steel consumer. The slowdown in construction activities limits the demand for steel and therefore iron ore.

Although Chinese steel producers' increased focus on export markets partially relieves the pressure on the sector, this is not enough to completely compensate for the weakness in domestic demand.

DIFFERENT PRICE MOVEMENTS IN INDUSTRIAL METALS

The price of iron ore in dollar terms continues its annual losses. The price per ton decreased by 13.79 percent to $90.95.

Different price movements were observed in other industrial metals. The price of lithium decreased by 0.58 percent to 102 thousand 350 yuan, and the price of hot rolled steel decreased by 0.15 percent to 1,363 yuan.

On the other hand, platinum gained 0.50 percent to $1,656.50 per ounce. Titanium price maintained its horizontal course at 43.50.

HISTORICAL PRICE LEVELS IN IRON ORE

Historical data for the period 2013-2026 shows that the ton price of iron ore in yuan reached its highest level at 1,920.50 yuan and its lowest level at 284 yuan.

While the current reference price is stated as 680.50 yuan, the previous reference value was 682.50 yuan.

Three main factors are expected to have an impact on the direction of iron ore prices in the coming period: developments in China's steel consumption, the export volume of Australia and Brazil, and the supply-demand balance in global steel production.

General outlook: Expanding global supply and weakening steel consumption expectations increase downside risks in the iron ore market. If the construction industry in China cannot recover, the pressure on prices may continue to remain on the agenda.