(HSV VIETNAM GROUP) – In the trading session on October 12, 2023, iron ore futures prices increased on hopes that China may consider introducing more impactful stimulus measures to support its weakening economy.
The price of iron ore for delivery in November 2023 on the Singapore Exchange increased 0.7% to 111.55 USD/ton, after hitting a six-week low of 109.25 USD in the previous session.
Iron ore contract delivered in January 2024 in Dalian of China closed up 1% to 827.50 CNY (equivalent to 113.39 USD)/ton.
Country Garden has warned of an inability to meet foreign debt obligations, potentially joining a growing list of Chinese developers that have defaulted and underscoring a deepening crisis hurting the world's second-biggest economy and biggest steelmaker and metal consumer.
Meanwhile, China is looking to widen its budget deficit for 2023 as the government prepares to roll out a new round of stimulus to help the economy meet its annual growth target, Bloomberg News reported.
However, in Shanghai, rebar prices decreased by 0.2%, while hot-rolled steel coil decreased by 0.3% and stainless steel decreased by 0.1%.
Global steel prices are likely to rise slightly from current levels through December on hopes that the Chinese real estate sector will see a turnaround as Beijing may announce some stimulus measures.
The Australian Office of the Chief Economist (AOCE) said in its quarterly report that global steel demand continued to slow, due to ongoing weakness in China's property sector, as well as lower demand from manufacturing and construction in Europe.
“Global steelmakers are expected to face weak demand and stable prices for the remainder of 2023,” the organization said.
Despite China's economic recovery, demand for metals, including steel, remained at its lowest level in the first half of the year as growth was largely driven by the services sector, research agency BMI, a unit of Fitch Solutions, said.
Although China's real estate sector is still in recession, "we are seeing signs of change in the growth rate of mainland China's steel consumption," the research agency said.
“We are maintaining our 2023 global average steel price forecast at $730/tonne and expect prices to improve slightly from current levels in the coming months through 2024,” BMI said.
On NYMEX, continuous HRC steel futures are currently quoted at $697/ton.
Manufacturing growth is expected to be strongest in countries and regions such as India, Southeast Asia and West Asia.
But Trading Economics said financial concerns had prompted key developers to halt construction on a series of unfinished and yet-to-be-started projects in China, hindering purchases of steel from one of the country's main sources.
Falling global demand due to slowing economic growth, as well as higher energy and input costs, continues to weigh on manufacturing activity in many major economies.
“Industrial production is particularly weak in the EU, Japan and South Korea in 2023. Weak demand has caused the eurozone construction sector to slide into a deep contraction over the past six months,” the Office of the Chief Economist said.
BMI said China's consumption growth is starting to turn a corner, which should support prices along with continued growth in Indian demand.
AOCE said India's steel production is forecast to increase 6.8% in 2023 to 134 million tons. But the outlook for US steel demand in the second half of 2023 contains downside risks.
“Residential construction is facing increasing headwinds from rising interest rates and higher land and materials costs,” the report said.
Research agency BMI said it expected output to increase in the fourth quarter, improving supply and lasting until the first quarter of 2024, driven by Chinese steel mills. A production recovery is also possible in other key markets.
Ha Diem HSV