Iron ore prices fell by 4-4.5% in December

Iron ore prices experienced a significant decline during the period of December 1-23, 2024. January futures on the Dalian Commodity Exchange fell by 4.5% to $105.38/t, and by 4% – to $100.55/t on the Singapore Exchange.

At the beginning of the month, the market was optimistic, driven by positive economic data from China and expectations of stimulus measures by the government. In particular, on December 2, prices rose due to improved economic indicators, although restrictions in the form of lower demand restrained growth. On December 3, prices reached a two-month-high amid expectations of new stimulus and active restocking.

However, closer to the middle of the month, the market fluctuated due to conflicting signals about China’s economic policy. On December 5, prices fell on fears that the expected stimulus might not meet investors’ expectations. Nevertheless, on December 10, the market rose again to a two-month high after new promises from the Chinese authorities to stimulate the economy. Such statements temporarily boosted investor confidence, but the trend soon turned downward again.

At the end of December, iron ore prices continued to decline due to a seasonal drop in demand and an improvement in the supply situation. In particular, on December 19, quotations fell to almost a one-month low amid concerns about a slowdown in China’s economy and the US Federal Reserve’s forecasts. On December 20, prices continued to decline, ending the week with losses due to weak seasonal demand.

The main factors that influenced the price dynamics during the month were China’s economic policy, seasonal fluctuations in demand, and the supply situation. The expectations and actual actions of the Chinese government to stimulate the economy directly affected market sentiment. The winter decline in steel production led to a decline in demand for iron ore, while the resumption of mining companies after weather-related disruptions eased fears of a supply shortage.

According to analysts, in the short term, iron ore prices may remain in the range of $100-110/t, given the winter restocking by steelmakers. However, further dynamics will depend on China’s economic policy and global macroeconomic trends, which will affect the supply and demand of this key raw material.

Fitch Ratings forecasts raw material prices at $105 per tonne in 2025, $90 per tonne in 2026, and $85 per tonne in 2026.

Goldman Sachs analysts expect a further decline, predicting $85/t in the fourth quarter of 2024 due to a possible oversupply and a slowdown in steel activity in China.

BMI’s expectations are as follows: $110/t in 2024, $100/t – in 2025, and a gradual decline to $78/t – by 2033. HSBC Holdings, a British international commercial bank, expects iron ore prices to reach $100/t in 2024. Capital Economics predicts that ore prices will range from $99-100/t.