On Monday, the iron ore price made another leap higher despite a new report from the the World Steel Association predicting a slowdown in global demand going into 2018.
The Steel Index benchmark price for Northern China 62% Fe ore gained 4% to trade at $62.40 a tonne on Monday. Year-to-date iron ore has averaged just shy of $72 a tonne compared to $56.50 over the course of 2016.
Global steel demand growth is expected to slow to 1.6% next year after a robust 2017 mainly as a result of strong expansion in China which forges as much steel as the rest of the world combined, the industry association said on Monday:
China’s steel demand is expected to increase by 3% in 2017, an upward revision over the previous forecast according to worldsteel, but the outlook for the 2018 remains subdued “showing no growth over 2017 as the government resumes and strengthens its efforts on economic rebalancing and environmental protection.”
Worldsteel forecasts in 2018 global steel demand will reach 1.65 billion tonnes with demand excluding China pegged at 882 million tonnes, an increase of 3% in 2018 compared to this year.
More insights on the direction of metal prices should emerge from the 19th National Congress of the Communist Party of China which opens on Wednesday. The twice-a-decade gathering will determine the economic goals for the country and could have a significant impact on demand for metals and minerals as authorities continue to tackle the country’s pollution problems.
Data released over the weekend showed Chinese producer price inflation rose to 6.9% in September compared to a year ago. The main driver of higher factory gate prices have been metals and minerals which have risen in response to resilient infrastructure spending, capacity cuts and speculation over future market tightness, Capital Economics said in a note.
China’s iron ore imports constitute more than 70% of the global seaborne trade and customs data released last week show September cargoes arriving at the country’s ports jumped to 103m tonnes, up 11% compared to a year earlier. September imports rose by 14.3m tonnes from August. The previous record of 96.5m tonnes was set in March this year.