Iron ore and steel prices retreat

• Global seaborne iron ore exports totalled 30.21 Mt in the week ending 11 August, remaining below the 52-week average. While Brazilian exports remained firm at 8.42 Mt, Australian shipments declined to a nearly four-month low of 15.83 Mt. Concerns over weakening demand appear to have prompted some miners to curb exports as Chinese steel production slumps and the country’s iron ore port inventories remained above the 150 Mt mark for the third consecutive week.
• Chinese crude steel production slumped to a five-month low of 82.94 Mt in July, down by 9.5 Mt y/y, official data show, and diverging from the trend for iron ore imports. This was a steeper decline than indicated by China Iron and Steel Association (CISA) member mill data and also implies a possible upward revision to production data for 2023. At 613.72 Mt January-July production was down by 2.20% on the same seven months last year.
• Weak market fundamentals continue to weigh on China’s steel producers. Additional short-term pressure came from the dumping of rebar produced under old quality standards as traders rushed to clear inventories ahead of new standards taking effect on 25 September. This contributed to the most traded October rebar contract on the Shanghai Futures Exchange (SHFE) falling to a seven-year low, closing at 3,099 yuan/t ($434.11/t) on 14 August. Chinese crude steel output remained soft at the start of August, CISA member mill output for 1-10 August was just 2.00 Mt/day, down by 6.94% y/y.
• Lower production data from Chinese steel mills was accompanied by soft data from the Chinese economy for July. Industrial output growth slowed to 5.1% last month, down from 5.3% in June, although some consumer demand data was more positive. However, data from the country’s property sector remains dire, with the pace of decline in new home prices accelerating. This is weighing on iron ore prices with the delivered price of 62% Fe in North China (TSI) dropping to the lowest point since November 2022 at $98.55/t on 15 August.

Chinese iron ore imports and steel production diverge ($/t)

Source: Kpler, NBS

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