RESEARCH: Supply boost threatens iron ore price spike

The latest forecasts from Fastmarkets’ team of analysts are ready to view.

  • Iron ore remains the most bullish commodity of the year, with prices fuelled by Chinese demand and supply disruptions in Brazil, along with bullish sentiment. But prices are expected to come down because Brazilian exports have begun to recover, and have reached their highest level since the Brumadinho dam disaster in 2019. With more mines now in operation, Vale is able to produce 1 million tonnes per day, and we expect this upsurge in Brazilian production to be sustained. If Australian suppliers continue to operate without disruptions, the current high iron ore prices will come under further pressure.
  • Port stocks have been rising and blast furnace utilization rates have been stagnating, suggesting there is limited room for further price rises. Curbed steel raw material demand is also reflected in the declining freight rates into China, with China’s import ban on Australian coal likely to have increased vessel availability in the basin.
  • But Chinese iron ore demand has remained resilient amid high crude steel output levels, so we do not expect to see a sharp downward correction in iron ore prices. We believe direct-feed iron ore products such as blast furnace pellet face the strongest upside risks to prices this quarter. This is because the demand for these products is boosted by rising domestic coking coal prices, sintering restrictions and pollution curbs imposed by Chinese authorities.
  • The strong demand pull from China has also helped to strengthen the prices for merchant pig iron (MPI). China has been importing significant amounts of this material since mid-2019 amid its relative price attractiveness over domestic scrap, but the attractiveness has diminished recently. MPI trade into China may be restrained further if the Chinese authorities allow a resumption of ferrous scrap imports.

Click here to view the Steel Raw Materials Market Tracker in full.

Fastmarkets’ flagship global steel event, Steel Success Strategies, is running as an online conference on October 26-28, 2020. Register today to hear directly from Fastmarkets’ pricing experts and analysts, as well from some of the most important chief executive officers in global steel.

What to read next
The global steel industry’s move to decarbonize and China’s penchant for lower-grade ores in recent years have uncovered challenges for high-grade iron ore to live out its value in both the blast furnace-based steelmaking route and the direct-reduction iron process, delegates told Fastmarkets during the Singapore International Ferrous Week (SIFW), which takes place from May 26-30.
Discover how President Trump's tariffs impact the US fluff pulp export market, specifically targeting the EU and China.
The global iron ore market, a pivotal component of the steelmaking industry, has historically been driven by simple supply and demand dynamics. However, steel trade tariffs, trade wars and a growing trend toward resource nationalism are reshaping this once-basic industrial staple. These forces, alongside rising environmental regulations and shifting trade patterns, are profoundly influencing iron ore pricing, production and consumption trends. 
The playing field for global iron ore brands could be poised to be leveled, given a recent announcement on lower iron content in a key mainstream Australian direct shipping ore, iron ore market participants told Fastmarkets, adding that the development could narrow the price disparities between major Australian mid-grade iron ore brands.
This strategic launch is intended to offer the market a single reference price denoting the differential between US Midwest rebar and heavy melting-grade scrap, a key component in the production of that grade. Details of the previous launches can be found via this link. The methodology specification for this differential is: MB-STE-0930 Steel reinforcing bar […]
The graphite industry in 2025 faces major challenges, including trade wars, high US tariffs on synthetic graphite and policy changes affecting EV manufacturing and tax credits. Low natural graphite prices, oversupply and slow EV growth make diversifying supply chains essential for market stability.