Seaborne iron ore prices could remain elevated at $110-120/tonne cfr China levels throughout the traditional seasonally weaker period before Lunar New Year due to tightness in China’s domestic iron ore market.

The market has been expecting iron ore prices to drop for months amid a slow Chinese economy and accelerating seaborne ore supply. “There’s plenty of tonnage, so why is the price not breaking?” Ian Roper of Kallanish Consulting Services asked at Kallanish Flat Steel 2023 in Istanbul last week. China has renewed its mining safety clampdown, disrupting domestic production and lifting imports, with the same true for coking coal, he explained.

With coking coal, Indian steelmakers’ peak demand occurs in the fourth and first quarters, during rainy season in Queensland. This is why prices have hovered around $250/t at mid-year and then surged to $400/t at year-end for three consecutive years, Roper said.

On the topic of where future economic growth is supposed to come from in the developed world, Roper warned that the Western world will face major structural headwinds due to China’s policy of offshoring factories all over Asia. This will allow Chinese companies to circumvent barriers they face to supplying the West and create difficult competition for manufacturers in higher-cost, developed economies.