Iron ore spot prices have shown mixed results this week. Some analysts arguing that prices would stay positive after gains earlier in this week.
But this all stopped come Tuesday, when the iron ore price and future markets both taking some hits.
The spot price for benchmark 62% fines dipped 0.2% to $71.50 a tonne, continuing its fall for the first time since 27 September.
The small price movements were much the same for other grades following the commodities strong rebound, with 58% fines lifting 0.8% to $41.61 from its previous price dip of 0.3% at $41.30. This gain was its highest level since 8 March. Higher grades like Brazilian slipped 0.1% after gaining 0.1% earlier this week, to $97.20 a tonne.
The mixed performance is thought to be because of the product cuts in Chinese steel futures on Tuesday.
Iron ore price quiet after World Steel Association forecast
Despite having a mixed bag of results due to a pullback in steel futures, new forecast for demand in steel appeared encouraging.
Yet there was little indication of this reflected in prices.
The World Steel Association revealed its latest forecasts for global steel demand, predicting a 1.4% increase in 2019 after an expected 3.9% boost this year.
With continued improvement expected in steel demand in 2019 and potentially beyond, the World Steel Association pointed out that,
‘Global steel demand will reach 1,657.9 million tonnes in 2018, an increase of 3.9% over 2017.’
‘In 2019, it is forecast that global steel demand will grow by 1.4% to reach 1,681.2 million tonnes.’
Will Iron ore price forecasts reflect reality?
The jury is still out on whether forecasts will reflect reality in iron ore prices. This is because it will most likely come down to Chinese policy makers and whether they choose to generate economy growth in grips of a trade war with the US, which is quickly reaching boiling point.
There are downside and upside risks present for China. Downside risks emerge through the ongoing trade tension with the US and a slowing global economy.
On the other hand, if the Chinese government chooses to accelerate measures to limit the potential slowdown of the Chinese economy at the brink of a weakening economic environment, this means more likely than not that steel as well as iron ore demand will be boosted into 2019 and beyond.
For Markets & Money