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After rallying, dropping steeply and bouncing back to 18-month highs, the iron ore market’s 2023 has arguably been full of volatility. As one of the world’s most important industrial metals, any movement in the price of iron ore has been closely watched by investors. So, where will iron ore prices go in 2024？ Here are some insights from experts.
What trends and catalysts will influence the supply and demand factors in the iron ore market going into 2024? Analysts at market intelligence firm Project Blue believe that demand for iron ore will be driven, as always, by Chinese steel production, as well as by the country’s macro environment and property sector. In addition, China’s steel exports, port inventories and environmental regulations will remain important factors to watch in 2024.
Wood Mackenzie expects steel demand in China to remain weak in the short term. However, the de-stocking of iron ore at Chinese ports over the past six months has provided some underlying support for prices, and some of China’s large steel mills are likely to replenish stocks ahead of the Chinese New Year.
Analysts note that if the level of Chinese steel exports the market is seeing in 2023 continues into the new year, and if port inventories remain low and are pushed down below 100 million tonnes, then iron ore prices could potentially spike in the first quarter.
Outside of China, seaborne shipments from the two largest producers of iron ore are typically lower in the first quarter of the year due to the cyclone season in Australia and the rainy season in Brazil, which both Project Blue and Wood Mackenzie see as another supportive factor for iron ore prices in early 2024.
On top of that, another important factor for the iron ore market in 2024 will of course be China’s fiscal stimulus measures, with Project Blue pointing out that additional fiscal measures aimed at boosting domestic consumption and the property market will have a positive impact on the construction sector, steel production and iron ore demand.
David Cachot, head of research in Wood Mackenzie’s metals and mining team, said the market continues to bet that policy support from China will boost downstream steel demand. However, subdued property investment and land sales point to a further decline in new construction starts in 2024 and future years, which will put pressure on steel demand forecasts. However, demand for iron ore outside of China is expected to improve in 2024, particularly as the steel industry in India and Europe recovers.
And analysts agree that the outlook for iron ore supply in 2024 should be more predictable than demand, that is, iron ore supply is growing slowly. It’s worth pointing out that one supply-side factor that could affect iron ore prices is the potential control of the market by China Mineral Resources Group (CMRG), which was established in 2022 to negotiate raw material purchases with global mining companies, with the aim of mitigating the impact of market movements on prices.
Wood Mackenzie’s 2024 iron ore price forecast (62 percent Fe fines basis, CFR China) is $110 per tonne, and $100 per tonne in 2025.
