Global iron ore supply and demand are expected to ease slightly in 2024

Macroeconomic expectations have dominated the market recently, spot prices have continued to rise, regulatory pressure has increased sharply, iron ore’s own driving force has weakened, and price fluctuations have increased. The demand for iron ore is marginally weakening, the elasticity of the supply side is relatively small, the basis for iron ore has shrunk to a low level, speculative demand for futures and spot prices has been suppressed, and it is expected that there will be greater upward pressure in the short term. In the medium term, new production capacity on the iron ore supply side and improvements in mine efficiency will help the global iron ore supply side continue to develop, and the growth rate of global iron ore demand will be slower than the supply growth rate. And domestic iron ore demand may decline slightly, and the current price of iron ore is expected to fall in the medium term.
There will still be an increase in iron ore supply in 2024
In terms of supply, the supply of foreign minerals continues to be strong, the supply of iron ore in Australia and Brazil has increased significantly, the supply of non-mainstream minerals has increased significantly, and the output of domestic minerals has remained high.
Data from the General Administration of Customs shows that my country’s iron ore imports from January to October were 975.842 million tons, a year-on-year increase of 58.422 million tons, or 6.5%. Based on the shipping targets, shipping rhythm and iron ore price changes of the four major mines, the annual iron ore import volume is estimated to be 1.164 billion tons, a year-on-year increase of 57.35 million tons, or 5.2%.
Based on the annual targets of mainstream mines and the pace of production capacity recovery or launch, as well as the production capacity of non-mainstream mines, the supply-side increment is estimated to be 50 million tons to 55 million tons in 2024.
In terms of mainstream mines, the output of the four major mines is expected to be 1.146 billion tons in 2024, a year-on-year increase of 32 million tons. Among them, Vale’s S11D mining area has released 5 million tons/year of output; Rio Tinto’s capacity replacement project transformation is progressing smoothly, and output is expected to increase by 8 million tons/year; BHP Billiton’s South Flank project is expected to achieve full production by the end of fiscal year 2024. The output is expected to increase by 4 million tons per year; the FMG Iron Bridge Ore Project will officially enter the operation and production stage in August 2023, and the output is expected to increase by 15 million tons per year. In terms of non-mainstream mines, it is expected that the total increase in iron ore supply from non-mainstream mines in 2024 will be 13 million tons. In terms of domestic mines, it is expected that the output of iron ore from domestic mines will continue to grow steadily in 2023, with domestically produced iron concentrate powder being approximately 300 million tons throughout the year. In 2024, domestic mineral powder production is expected to increase by 5 million tons to 10 million tons to about 310 million tons.
Iron ore demand remains high
There may be a slight decline in the later period
On the demand side, global iron ore demand continues to increase, short-term domestic demand remains high, and there is a slight decline expected in the medium term. According to data released by the National Bureau of Statistics, from January to October, crude steel production increased by 1.40% year-on-year, and pig iron production increased by 2.30% year-on-year. Since the beginning of this year, the average daily hot metal output of steel plants has remained at a high level, reaching a maximum of 2.4899 million tons, with an average increase of 117,400 tons year-on-year.
Recently, the average daily hot metal production has declined to a certain extent. Last Friday (November 17), the average daily hot metal production of 247 steel plants across the country was 2.3547 million tons. As the crude steel leveling control policy has not yet been effectively implemented, self-disciplined production reductions by steel mills alone are not enough. It is expected that steel mills’ demand for iron ore will decrease month-on-month in the next one and a half months, but the decrease will be limited. Looking at the whole year of 2023, iron ore demand will be at a high level.
According to predictions by relevant institutions, global crude steel consumption will increase by 34 million tons year-on-year in 2024, and global iron ore consumption is highly resilient. In 2024, without strict production restriction policies, steel mills will dynamically adjust production driven by profits. The annual crude steel output will remain above 1 billion tons, and domestic iron ore demand will remain high. Scrap supply is expected to increase in 2024, but with the price difference between snail scrap and iron scrap at a low level, the increase in scrap supply is expected to be small, and the crowding out effect on iron ore demand will be weak.
Macroeconomic expectations support future ore prices
Highly flexible operation
On the macro front, there is still the possibility of raising interest rates in the United States, but with the decline in inflation and the deterioration of non-agricultural data, the United States is expected to gradually enter an interest rate cutting cycle in 2024. Domestically, policy stimulus will be increased to ensure high-quality and stable development of the Chinese economy, especially countercyclical adjustments to fiscal policy. The fiscal budget will issue an additional 1 trillion yuan in government bonds, and the implementation of local debt package plans will also improve local financing conditions. The country as a whole still maintains a prudent monetary policy. In order to maintain economic vitality, there is a high probability that monetary policy will be stepped up. The monetary policies of China and the United States will gradually move in the same direction. Domestic steel demand will still be affected by the downturn in the real estate market, but considering the active advancement of projects such as urban village renovation, affordable housing, and both leisure and emergency infrastructure, steel demand in real estate remains basically stable. Benefiting from the country’s strong support for the manufacturing industry, demand for industrial steel will remain strong.
On the whole, in 2024, global iron ore supply is expected to increase, demand will increase steadily, and supply and demand will ease slightly. The tight balance between domestic iron ore supply and demand will most likely be alleviated, but in order to achieve loosening of supply and demand, production restriction policies will be needed. Domestic and foreign macroeconomic and industrial policies have a significant impact on iron ore prices, and iron ore prices will remain stable. Highly elastic operation.