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Iron ore woes endure as Chinese steel demand faces 'last hurrah'

Bloomberg
Bloomberg9/21/2021 9:52 PM GMT+08  • 3 min read
Iron ore woes endure as Chinese steel demand faces 'last hurrah'
That demand squeeze will continue as China’s now mature steel sector faces further caps on production
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Iron ore’s rollercoaster ride this year is set to end with a whimper as the contraction in China’s steel industry heralds further declines.

The steelmaking ingredient was in the vanguard of this year’s commodities boom, but has plunged 60% from a record above US$230 a ton in May. Curbs on steel output, alongside a property crackdown and concerns about a power shortage, have hammered iron ore demand in China.

That demand squeeze will continue as China’s now mature steel sector faces further caps on production, which plunged to a 17-month low in August. As a consequence, iron ore will come under more pressure, falling to US$80 to US$90 a ton heading into next year, said UBS Group AG strategist Wayne Gordon.

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