Global iron ore prices ended the 2023-24 financial year with a reasonable 11% gain.
The rise—from $US97.80 at the end of June 2023 to $US106.75 on Friday on the SGX platform in Singapore—was stronger than many anticipated, given the price fluctuations throughout the year. Prices rose, fell, rose again, and then stabilized.
The second half of the year told a different story: starting at $US130 a tonne in December, the price fell to a low of $US97 a tonne in April. By June, it had recovered to nearly $US107, marking a more than 17% decline over the six-month period.
As a result, companies performed well in the first half but may struggle in the upcoming June half-year earnings.
Portside iron ore stock movements illustrated this fluctuation. Starting at nearly 128 million tonnes in June 2023, stocks steadily increased to just over 149 million tonnes by early June this year. They then slightly eased before spiking by 430,000 tonnes to reach 149.3 million tonnes, according to the weekly survey by the Mysteel commodities website in China.
Mysteel reported a significant increase in imports from June 17-23, with an additional 2.7 million tonnes arriving, totaling 24.7 million tonnes—an increase of 12% from the previous week and 16% from the same period last year. This rise in imports contrasted with the 11% increase in iron ore prices, indicating a surplus.
Crude steel production totaled 91.1 million tonnes a year ago, fell to 67.4 million tonnes in December (a multi-year low), and then recovered to 92.9 million tonnes in May.
The main factor destabilizing the market was the ongoing slump in demand for steel from property and construction sectors, despite discussions of increased infrastructure spending. Rebar output, a key steel product for housing and construction, was 12% lower in May compared to the previous year—a clear indicator of reduced housing demand.
However, the second half of the year is expected to see gradually rising demand from the white goods and automotive sectors, buoyed by scrappage subsidies now in full effect.
Thursday’s deadline from the EU regarding tariffs on Chinese exports of electric vehicles (EVs) to the region could potentially impact demand for rolled steel products. If no agreement is reached or if settlement terms increase costs, it may lead to lower demand.
