In recent months, along with the decline in international steel prices in some products and the ups and downs of this field, we have seen a decline in iron ore prices in the past two months. One of the main reasons for the drop in the price of this raw material has been China’s political behavior. In the last few months, China has made every effort to control the price of raw materials. Despite the limitations of this area, supply remained virtually without demand. Sometimes we saw the Chinese government control prices in an orderly manner. However, these conditions have shaped the situation of the iron ore market in the past few months. In the following, we will examine different aspects of this issue. Please be with Artan Press.
*** Drop in iron ore prices from the perspective of Dalian stock exchange indices
We evaluate the latest iron ore news from Dalian Stock Exchange. According to the latest data from the Dalian Stock Exchange, the fall in iron ore prices is still on a steady slope. The Dalian Stock Exchange index for January delivery 2022 fell 6.2% to $ 104. World iron ore prices fell nearly 5% on Friday to near $ 100, the lowest level in 14 months. This shows how much the Chinese government has a monopoly on raw material pricing policies.
The Swiss bank UBS has updated its forecast for iron ore, saying that the market is expecting a price of $ 89 in the coming months. To reduce the supply, the market will reach equilibrium. It seems that this steady and uninterrupted decline will later receive from the technical debt market and create a sharp and unusual growth.
*** Evaluate China’s policies in reducing iron ore prices for 4 months
The most important reason for the fall in iron ore prices is China’s commodity market policies. In the current situation, China is the main cause of falling iron ore prices. The government will limit the production of steelmakers in the winter and, according to the 2016 strategy, will prevent the growth of steel production. Given China’s growing steel production this year, steelmakers will have to cut production by 18% in the coming months to meet the government’s goal. This 18% has had a significant impact on reducing the production and supply of this product. It is exactly 4 months that the process of falling iron ore prices has started and this path continues without interruption. It seems that this path will continue with the same intensity until the end of 2021.
*** Management crisis in China’s mining giants
Another issue that has strongly affected the fall in iron ore prices is the coincidence of the crisis of China’s construction giant Evergrande. The company is on the verge of bankruptcy. Developments in the country have added to market concerns that could negatively affect banks and their lending power, lowering copper, aluminum and zinc prices. Given that this issue has been raised in various analytical networks, there will be a high risk for the iron ore market and a drop in iron ore prices and demand.
*** Different path of steel and iron ore in verb terms
Steel prices have been fluctuating throughout the year. According to one index, the future price of a ton of hot-rolled coil steel is approximately $ 1923. That was $ 615 last September. Meanwhile, iron ore prices – the most important element of the steel trade – have fallen by more than 40 percent since mid-July. Demand for steel is growing. But the demand for iron ore is declining. It seems that the re-emergence of the corona virus delta in China is also due in this direction. China hot rolled coil price chart in the last year
*** Environmental excuses for falling iron ore prices
In an effort to prevent air pollution, China is reducing its steel sector, which produces between 10 and 20 percent of its carbon emissions. (Aluminum smelters in the country face similar restrictions.) China has also increased steel export tariffs. For example, since August 1, tariffs on ferrochrome, a stainless steel element, have doubled from 20 to 40 percent. .
*** Acceptance of current conditions by the world’s mining companies
Mining companies are adapting to China’s new production targets. “The growing sharp decline in steel production in China in the first half of this year, as confirmed by the industry leader in China in early August,” the vice president of BHP, England and Australia, the Australian mining giant Anglo, wrote in a note in late August about the 2021 outlook. China’s pressure on global steel supply indicates that shortages of many products will continue until demand and supply stabilize after the epidemic [Quaid 19].
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