Iron Ore Prices Plummet Over 15% in 2024 Due to Declining Chinese Demand and High Port Stocks

Forex - Iron ore futures ended 2024 with a sharp decline of over 15%, driven by weakening demand, weak steel margins, and high port stockpiles in the largest consumer, China, pulling down prices of this essential steelmaking material.

Statements from China's President Xi Jinping suggesting that gross domestic product (GDP) is expected to grow around 5% this year supported the market, while increased caution following a slowdown in factory activity in December pressured prices at the beginning of the session.

The most traded May iron ore contract on the Dalian Commodity Exchange (DCE) finished day trading up 1.17% at 779 yuan ($106.73) per metric ton.

The benchmark February iron ore contract on the Singapore Exchange dropped to $99.6 at the session's start but rose by 0.23% to $100.4 per ton by 0703 GMT.

With China's crude steel production declining by 2.7% year-on-year in the first 11 months of the year, the weakening demand has resulted in a 16% drop in the Dalian contract since the beginning of the year, while the Singapore contract fell by 18.5%.

Tomas Gutierrez, data manager at consultancy Kallanish Commodities, mentioned that there may be more supply surplus in maritime iron ore markets in the new year. "Australia's exports are increasing and some significant projects are accelerating. Therefore, prices will be under pressure."

Other steel production components on the DCE saw gains, with coking coal and coke rising by 0.91% and 1.43%, respectively, although they recorded year-on-year declines of 44% and 32.5%.

Steel indicators on the Shanghai Futures Exchange displayed mixed results but concluded the year with declines ranging from 11% to 25%. Rebar rose by 0.39%, wire rod increased by 0.08%, while hot-rolled coil declined by 0.09% and stainless steel dropped by 0.35%.