Iron ore prices are experiencing downward pressure in China, influenced by a combination of fundamental factors and sentiment dynamics that are expected to persist in the near term. The price of Singapore Exchange iron ore contracts reached $110.05 per metric ton, marking the lowest close since August 31 and a 23.4% decrease from the peak earlier in 2024.
Similarly, the main domestic benchmark in China, the Dalian Commodity Exchange futures contract, dropped to 819.5 yuan ($114.04) per ton on Wednesday, hitting a five-month low and down 19.2% from the peak earlier in the year.
Fundamentally, signs indicate that China’s robust demand for imported iron ore in the first two months of the year has tapered off in March, leading to swelling port inventories. China, a major importer accounting for over 70% of global seaborne iron ore trade, is projected to import 99.62 million tons of iron ore in March, according to Kpler analysts.
However, alternative data from LSEG suggests lower imports of 91.4 million tons in March, potentially marking the weakest month since April last year. Official customs data revealed imports of 209.45 million tons in the first two months of 2024, up 8.1% from the same period in 2023.
Despite varying estimates, the expected daily import figure for March remains below the rate observed in the initial two months of the year. This decline in imports during March may be attributed to elevated prices prevalent in the preceding months, prompting adjustments in purchasing patterns.
Notably, iron ore prices in Singapore remained above $130 per ton until mid-February, gradually moderating to current levels thereafter. The evolving market conditions underscore the delicate balance between supply, demand, and pricing dynamics impacting the iron ore market in China.