Since the beginning of November 2024, iron ore futures on major Asian exchanges have been declining, reflecting global economic trends and expectations of stimulus measures from China. In particular, January futures on the Dalian Commodity Exchange fell by 3.3% – to RMB762/t ($106.1/t) between October 31 and November 11, while the benchmark December futures on the Singapore Exchange fell by 3% – to $100.6/t during this period. The decline reflects a slowdown in economic activity and a general decline in demand for raw materials caused by weak economic performance in China.
At the same time, iron ore prices fluctuated at higher levels last week – at $103-106/t on the Singapore Exchange and $108-112/t on the Dalian Exchange – but fell sharply during trading on November 11.
The main factors influencing the iron ore market are China’s economic policy, changing investor sentiment, global macroeconomic and geopolitical factors, as well as seasonality and rising raw material stocks.
News about possible economic stimulus from China played a significant role in shaping the market at the beginning of the month. On the eve of important economic meetings and announcements, the iron ore market began to show fluctuations, in particular due to growing expectations of new incentives that could support the construction sector and, as a result, demand for steel and iron ore. However, they quickly corrected downward after weak signals from Beijing. The outcome of the meetings did not meet investors’ expectations, and the economic support plans turned out to be less ambitious than expected. This led to a loss of confidence among market participants, which increased speculative activity and price volatility.
The situation with global demand for raw materials also remains ambiguous. Donald Trump’s victory in the US presidential election also had an impact on global markets, particularly on the Chinese market, where expectations for improved trade relations with the US have been renewed. However, the market reacted quickly to the news, and optimistic sentiment gave way to doubts, especially after the rhetoric regarding China’s economic stimulus turned out to be less aggressive.
In addition, this time of year sees a natural slowdown in demand for raw materials as the construction sector enters a low season due to weather conditions in the Northern Hemisphere. This traditionally leads to lower demand for steel and, consequently, for iron ore, which can keep prices down.
The iron ore market is expected to remain volatile in the coming weeks. Prices will be affected by both external factors (in particular, macroeconomic indicators in the US and Europe) and internal factors related to China’s economic policy. If the Chinese government does decide to implement more extensive stimulus, it could have a positive impact on iron ore demand. In this case, prices could reach $110-112/t on the Dalian Exchange and $105-108/t – on the Singapore Exchange.
On the other hand, the lack of clear economic support for the construction industry and limited demand for steel may keep prices low.
Courtesy : gmk.center
