The world prices for iron ore by early May fell to seven -month minimums

By the beginning of May, world prices for iron ore fell to seven -month minimums against the background of low demand for steel in China and trade restrictions. Analysts are waiting for a further decrease in quotations, taking into account the growth of production – by 15–20% in a negative scenario. The cost of iron ore mining in the Russian Federation is lower than in other countries, but manufacturers have difficulties with export, and domestic consumption of metal rolling continues to decline.

Iron ore futures with an iron rate of 62% on the CFR basis China on the Chicago Model Exchange (CME) on May 5 fell to $ 97.5 per ton. Previously, such low prices were recorded on September 30, 2024. By May 8, quotes have grown to $ 98.24 per ton, a minimum from January 10 of this year. Mikhail Shulgin, chief analyst of the Center for Investment Analysting Rosgosstrakh Life, notes that a small growth is a reaction to the statement of US President Donald Trump on his readiness to reduce duties on Chinese goods under certain conditions. But experts are not ready to talk about the beginning of the recovery trend.

The director of the Center for Economic Forecasting Gazprombank Alexander Semin points out that against the backdrop of a decrease in demand for steel in China (see. « Kommersant » from February 14) and the introduction of 25 percent import duties on steel in the USA demand for metallurgical raw materials will continue to remain under pressure. According to the expert, China is the largest importer of iron ore raw materials (ZhR). According to him, the stocks of iron ore in the ports of China are reduced from the record values ​​of August 2024, and the import of raw materials in the first quarter decreased by 7.8%, to 285 million tons, which was reflected in the prices of the ZHR.

According to Mr. Semin, taking into account the announced growth of production by the largest companies in Australia and Brazil, as well as the 2025 mining in Guinea, expected in the fourth quarter of 2025, in Guinea, 120 million tons of 120 million tons annually, iron ore prices in the second half can drop to $ 90 per ton. In a negative scenario, namely, the disagreements between the United States and China are not resolved, prices can fall by 15–20%, he predicts.

The analyst of the BCS Investments Ahmed Aliyev believes that under such conditions the least effective manufacturers who provide about 10% of the global iron ore supply can leave the market.

In the coal coking market, the expert notes, approximately 10% of mining companies are already unprofitable. If the prices for iron ore are dropped below $ 85 per ton, the world production of this raw material can be reduced by 100-120 million tons per year, says Oleg Abelia, the head of the analytical department of Rick-Trend.

According to Mr. Ablev, the cost of iron ore mining in Russia is much lower than that of global competitors – $ 40–45 per ton against $ 60–70 per ton in Australia and Canada. But, the managing partner of NEFT Research Sergei Frolov, Russian exporters are faced with difficulties in reorienting the supply of iron ore raw materials from European capacities to Asian markets due to logistics restrictions. And it is not possible to redirect the products to other countries, he indicates. So, notes Mr. Frolov, Türkiye in February 2025 reduced the import of the ZhRS by 66.5% in kind and by 76.8% in monetary. Attempts to reduce warehouses in ports have not yet have a significant impact on the balance of supply and supply, he adds.

There are also no prospects for the growth of domestic consumption of the ZhRS yet.

According to the Russian Steel Association on May 8, estimates, in January -April of the current year, the consumption of metal rolling in Russia decreased by 15% of the year, by the end of the year, a decrease may be another 10%. Many metallurgical companies operate with a profitability of less than 5%, indicated in the association. Severstal analysts previously evaluated the consumption of metal in the Russian Federation at the end of 2024 at 43.7 million tons, which is 5.7% lower than the 2023 indicator. Sergei Frolov believes that for stabilizing the ZhRS market, large -scale investment projects in metallurgy and construction are needed, primarily in China and other Asian countries that can stimulate the demand for raw materials.

Polina Trifonova