uploads///Steel Prices

What China’s Steel Price Trends Could Mean for Iron Ore Miners

By

Jan. 29 2019, Updated 9:01 a.m. ET

China’s steel prices

Bumper margins prompted Chinese steel mills to continue increasing their output. In 2017, Chinese steel prices rose ~30%, and they remained buoyant until last year’s third quarter. However, as steel production exceeded demand, steel prices weakened. There are many signs pointing toward the Chinese economy slowing further. While mills usually restock ahead of Chinese New Year, restocking demand has been poor this year due to weaker demand outlook.

Article continues below advertisement

Supply-demand mismatch

Whereas steel’s supply remains plentiful, domestic and global steel demand has been weakening, pressuring prices. Although the 90-day US-China trade truce initially improved Chinese steel market sentiment, steel supply strengthened and growth weakened further, resuming demand’s slump.

This trend could be negative for seaborne suppliers (XME) Rio Tinto (RIO), BHP (BHP) (BBL), and Vale (VALE), which came under increased pressure when iron ore prices fell off a cliff in 2014. Cleveland-Cliffs (CLF), on the other hand, has other drivers—namely US (DIA) steel market dynamics. 

Advertisement

More From Market Realist

  • MP Materials mine
    Basic Materials
    MP Materials (MP) Is an Attractive Play on Rare Earths
  • Woman looking at data
    Basic Materials
    Should You Buy SLV Stock Before Another Silver Short Squeeze?
  • Freeport-McMoRan employee at a facility
    Basic Materials
    FCX Stock Is a Good Buy for Investors as Copper Prices Top $10,000
  • Alcoa logo
    Basic Materials
    Alcoa (AA) or CENX: Picking the Best Aluminum Stock
  • CONNECT with Market Realist
  • Link to Facebook
  • Link to Twitter
  • Link to Instagram
  • Link to Email Subscribe
Market Realist Logo
Do Not Sell My Personal Information

© Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.