On Monday (December 31), iron ore futures prices rebounded due to improved steel profitability, declining port inventories, and market expectations for stimulus measures from China, the main consuming country. However, the increase in prices was limited due to a seasonal slowdown in demand.
The most traded May iron ore contract on the Dalian Commodity Exchange (DCE) closed up 0.91% in early trading at 775 yuan per ton (approximately $106.18). Last week, this contract fell by 1.8%.
As of 03:21 GMT, the benchmark January iron ore futures on the Singapore Exchange rose by 1.98%, reaching $100.8 per ton, after earlier dropping to a low of $98.95 per ton.
Data from the consulting company Mysteel indicates that as of December 26, 49.78% of the surveyed steel producers were profitable, up from 48.48% the previous week.
Analysts in a report stated, “Currently, the divergence in market outlook may widen, but the upward trend may continue. Port inventories continue to decline, and with major mining companies slowing down shipments while ore demand remains resilient (albeit decreasing), this trend might persist.”
According to Steelhome, as of December 27, iron ore inventories at major ports fell for the second consecutive week, decreasing 0.6% to 146.85 million tons. However, this level is still 28.3% higher than the same period last year.
If Trump administration imposes large-scale trade barriers, the global economy is expected to be affected. Global inflation could rise, leading many major economies to tighten monetary policy. With weak demand, commodities affected by global growth, such as copper and iron ore, are likely to weaken, along with crude oil and liquefied natural gas.
However, many Western analysts now believe that a rebound in the Chinese economy could be a pleasant surprise. If China seeks new markets to capitalize on its leadership in energy transition technologies and products, this revival could benefit commodities like copper, iron ore, liquefied natural gas, and coal.
