The reduction in Chinese imports in January-February failed to support the price of ore on the main trading platforms in Southeast Asia. Prices for iron ore concentrate (Fe 62) in the first decade of March decreased by 3.3% to $101.5/t CNF Qingdao, according to MetalPlace. From February 28 to March 7, the cost of iron ore (Fe 58) sea deliveries to Chinese ports fell from $92/t to $89/t CNF Qingdao, according to Kallanish.

This trend was observed amid a decline in iron ore imports to China. In January-February, shipments decreased by 8.4% year-on-year to 191.36 million tons, according to Chinese customs authorities. Steel production in China in January also fell by 5.6% year-on-year to 81.9 million tons. Demand for ore was further weakened by large stockpiles of ore made by Chinese steelmakers in December.

The cooling of market sentiment was facilitated by decisions approved at the National People’s Congress in early March. The announcement of a 1.3 trillion yuan ultra-long-term special bond issue, as well as an additional 500 billion yuan special bond, was below expectations. This may indicate a reduction in government development programs in the steel industry and key steel consumers. The potential for a recovery in ore demand is also limited by the continued downturn in the housing sector. In 2024, the volume of unsold housing in China increased by 16% to 391 million m2.

Market participants expect an increase in demand for ore by the end of March and in April due to the start of the construction season, which is expected to contribute to a rebound in prices. The current negative dynamics affect the profitability of Ukrainian iron ore producers, as the cost of raw materials in China is a global indicator.

Plans to cut steel production were announced at the National People’s Congress in Beijing on March 5, but specifics on the possible scope of cuts in the industry were not provided. The market speculated that steel production could be cut by 50 million tons per year.