PieTrader

Iron is the most commonly used metal worldwide. It is mainly used in the construction, mechanical, automotive and machinery industries, often as the main ingredient in steel. As such, iron ore supply is an important factor for the global economy. In terms of usable iron ore production, Australia and Brazil are the two largest iron producers in the world

August saw the lowest prices of iron ore cargoes with a 62% iron content in 20 months, falling below the $100 mark as mills reduced their purchases of iron inputs due to China's weak steel demand. The overabundance of housing in China and the absence of government stimulus packages for indebted real estate developers have progressively impeded the prospects for building. The fact that house prices dropped to their lowest point since 2015 and China's NBS Construction PMI reached a one-year low in July served as evidence of this. As a result, output data revealed that the nation's steel production fell by 9% from the previous month, which limited the prospect for blast furnaces to purchase iron ore input. Despite seasonal influences boosting draws, China's portside inventories of iron ore continued to climb through July, indicating the low demand from steel manufacturers. Moreover, other economies imposed trade barriers to stop Chinese dumping, which reduced the market for Chinese ferrous metals.

While Australia and Brazil are the largest exporters of iron ore, China is by far the largest importer of iron ore. As with many other commodities, Chinese demand significantly determines the global iron ore market. Nearly two-thirds of global iron ore exports to China are more than a billion tons.