Bernstein expects new supply to exceed demand, and further drawdowns of high inventories could put additional pressure on iron ore prices; higher freight rates raise marginal costs and support prices.
Citi estimates that China’s implied scrap steel use rose 14% year on year in September, but was still down 4% in the first three quarters; changes in the substitution of scrap for pig iron affect demand for iron ore imports.
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. Iron ore prices remain low, while lower freight rates have partly improved miners’ free-on-board prices.
