Iron ore prices exceeded $102 per tonne due to optimistic stimulus prospects from China, coupled with increased steel production. However, the Chinese government aims to limit steel output by 50 million tons annually, while trade tensions rise as Vietnam and other countries raise levies on Chinese steel.
In mid-March, iron ore futures surged past $102 per tonne, reaching a two-week peak, driven by optimism regarding potential additional stimulus measures from China, the leading global consumer of iron ore. This hopeful sentiment was fueled by an upcoming press conference where Chinese officials would outline policies aimed at enhancing consumption.
Furthermore, during the active construction season, Chinese steelmakers escalated their production levels, achieving a hot metal output of 2.31 million tons, subsequently increasing the demand for iron ore.
Conversely, the Chinese government reiterated its dedication to curbing crude steel production in light of overcapacity concerns among blast furnaces and mills. This policy is likely to result in an annual reduction of approximately 50 million tons of steel output.
In addition to these developments, trade tensions escalated as Vietnam announced higher dumping levies on Chinese steel. Additionally, countries such as South Korea, Brazil, and Chile indicated intentions to adopt similar protective measures.
The rise in iron ore prices reflects growing expectations for stimulus measures in China, combined with increasing production from domestic steelmakers. However, the Chinese government’s commitment to limiting steel production presents a significant counterbalance. Ongoing trade tensions, underscored by Vietnam’s increased levies and similar actions from other countries, further complicate the market dynamics for iron ore.
Original Source: www.tradingview.com
