Iron ore market softens, while Atlantic coal and Capesize freight firms

Iron Ore & Steel: Iron ore prices are falling to the $100/t mark

• Global seaborne iron ore exports reached a six-week high of 32.42 Mt in the week commencing 4 November, buoyed by a four-month high in departures from Australia, where Pilbara miners ramped up shipments from the seasonal low in October. In Brazil, exports have continued their downward trajectory after peaking in August, with loadings dropping to 6.85 Mt last week, the lowest since early July. However, a temporary uptick in shipments is anticipated in December as miners seek to expedite exports ahead of the rainy season.
• On the demand side, Chinese imports concluded at 26.17 Mt last week, the third highest since March this year as rising steel output continues to support iron ore consumption. Crude steel output by China Iron and Steel Association (CISA) member mills averaged 2.09 Mt in the first ten days of November, the highest since late July and representing a 6.36% growth y/y. However, early data suggest a possible pullback in crude steel output for the remainder of November, with production of molten iron and pig iron showing a slight decline relative to late October levels.
• In South Korea, iron ore imports totalled 1.03 Mt last week, a 14-week low and significantly below the five-year seasonal average of 1.53 Mt. However, the decline is unlikely to be directly related to the fire at POSCO’s Pohang Works on 10 November, which occurred at the No.3 FINEX plant (capacity: 2 Mtpa of molten iron). Although the incident may partially halt operations for about a week, POSCO has stated that the overall production should remain unaffected, as other units can make up for the production loss. The company’s assessment appears reasonable, as there is operational flexibility to increase production. POSCO’s crude steel output reached 25.90 Mt in the first nine months of 2024, down 2.87% y/y.
• Iron ore prices have struggled to gain traction in recent days, as Beijing’s latest stimulus announcements, unveiled after last week’s parliamentary session, failed to meet market expectations. As of 13 November, the benchmark SGX and DCE iron ore contracts declined 3.24% and 3.26% w/w, to $100.52/t and 756 yuan/t ($104.64/t), respectively. Without further positive news, it appears increasingly likely that the SGX second-month contract will dip below the benchmark $100/t mark in the coming trading days.