How much has Chinese steel production slowed?

  • In the 10 days through 20 October, China’s daily crude steel output was equivalent to an annualized 865 million tonnes, down 2% from the preceding 10 days and 4% year on year, the lowest level for the same period in at least five years.
  • The slowdown was not confined to the latest 10 days: rolling 30-day output fell 1% from the preceding 30 days and 2% year on year. JPMorgan estimates full-year crude steel output in 2026 at approximately 1 billion tonnes; the full-year forecast and the latest short-term annualized figure use different measures.
  • Steel mills remain loss-making on hot-rolled coil and rebar. In the week through 22 October, steel inventories fell 1% both week on week and year on year, in line with seasonal trends.

Why do low ore prices still weigh on miners’ earnings?

  • JPMorgan says Chinese demand is seasonally weak and iron ore prices remain near their lows for the year at around $90–91 per tonne. Based on a delivered China price of approximately $90, the bank expects further downgrades to iron ore miners’ earnings when recalculated at current prices.
  • Lower freight rates have partly eased pressure on miners: ocean freight from Australia to China has fallen to around $12 per tonne, close to pre-conflict levels. Subtracting freight from the delivered ore price gives an Australian iron ore free-on-board price of approximately $78 per tonne, still $11 below the start of the year.
  • The extent of recovery differs by route: freight from Brazil to China has fallen to $30 per tonne, still around 50% above the pre-conflict norm; freight from South Africa to China has also declined but remains about $5 per tonne higher.

How does JPMorgan distinguish among miners?

  • The bank maintains neutral ratings on the London-listed shares of Rio Tinto and BHP, as well as Anglo American, a view consistent with the pressure for earnings downgrades amid low ore prices.
  • The bank recently upgraded Kumba Iron Ore to overweight: although it is a high-cost iron ore producer, it is relatively sensitive to lower freight rates, which are improving its free-on-board price at current prices.
  • Glencore was also recently upgraded to overweight. JPMorgan says that, driven by higher copper and energy prices, Glencore is the only diversified miner in its screen to receive an upgrade to EBITDA calculated at current prices. The company also raised its through-the-cycle marketing EBIT guidance to $2.8 billion–$4.2 billion and reiterated that it expects more than $5 billion in 2026; JPMorgan forecasts $5.6 billion.