Unexpectedly! Iron Ore Prices Record Their Biggest One-Day Increase in More Than a Year

出乎意料!铁矿石价格创一年多来最大单日涨幅
Published on: Sep 25, 2024
Author: Amy Liu

On Tuesday, September 24 (local time), iron ore futures prices soared, marking the largest intraday increase in over a year. This surge was driven by China’s introduction of a new round of monetary stimulus measures and stock replenishment ahead of the National Day holiday in the country, boosting market sentiment.

Several banks had previously warned that iron ore prices could reach $80 per ton. The Commonwealth Bank of Australia cited BHP‘s latest outlook, suggesting that if China’s steel production continues to decline by 8%, iron ore prices could justifiably reach $90 per ton, and if the decline extends to 10%, prices could drop to $80 per ton.

Goldman Sachs stated that it expects iron ore prices to reach $85 per ton in the fourth quarter of this year, which is 15% lower than their previous projection of $100 per ton. Meanwhile, Bank of America commodity strategist Michael Widmer warned clients in a report that iron ore prices might fall below $80 per ton. Both Westpac and Citibank have also forecasted a drop to $85 per ton.

On Tuesday, the most traded January iron ore contract on the Dalian Commodity Exchange (DCE) closed up 4.64% at 699.5 yuan per ton ($99.38), marking the largest daily increase since May 29, 2023.

The benchmark iron ore price on the Singapore Exchange rose 5.8% to $94.65 per ton in October.

The People’s Bank of China unveiled the largest stimulus measures since the pandemic began, aiming to pull the economy out of deflationary sluggishness and return to government growth targets. However, analysts caution that further fiscal support is critical to achieving these goals. This unexpectedly extensive stimulus package includes more funding and interest rate cuts, representing China’s latest effort to restore confidence.

According to a report from the Chinese consulting firm Mysteel, “In the past week, the fundamentals of China’s imported iron ore market have improved. The rise in domestic steel mill production means that demand for raw materials remains robust. As terminal user consumption recovers and steel sales profits rebound, domestic steel manufacturers are gradually increasing output. Additionally, steel mills are expected to replenish iron ore stocks ahead of the upcoming National Day holiday from October 1 to 7, which will further enhance the fundamentals.”

Chinese financial information website Hexun Futures indicated that, due to significant short-term inventory pressures, iron ore prices are expected to fluctuate ahead of the holiday.

The benchmark steel prices on the Shanghai Futures Exchange continued to rise, with rebar increasing by approximately 3.2%, hot-rolled coils up almost 3.5%, and wire rods up 2.47%. However, stainless steel prices fell by 0.76%.

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