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The biggest boom of the century has come to an end. China, the largest consumer of iron ore, is facing high inventories and weak demand. Global mining companies like Vale need to reinvent themselves to survive the new scenario. Monetary policies and sustainable strategies will be crucial in 2025.
In a move that could reshape the global commodities landscape, China has taken steps that put an end to one of the iron ore industry's longest-running boom cycles.
Recent drops in commodity prices signal the end of the mineral's “golden era,” putting global mining companies like Vale on alert.
According to InvestNews portal, iron ore futures prices plunged to seven-week lows on Tuesday (07), reflecting the slowdown in demand in China – the world’s largest consumer – and the increase in stocks in the country’s ports.
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This scenario reveals a market under pressure not only due to the decrease in demand, but also due to the lack of new monetary stimulus from the Chinese government., which were widely expected.
Historic declines and global impacts
The May contract, considered the most traded on the Dalian Commodity Exchange (DCE), ended trading for the day with a drop of 1,38%, settling at 750 yuan per tonne (approximately 102,38 dollars).
During trading, the price reached 745,5 yuan, the lowest level recorded since November 19 last year.
In the Singapore market, the reference contract for February rose slightly by 0,06%, quoted at 96,65 dollars per tonne.
However, it also failed to escape broader declines, touching its lowest level since Nov. 18 earlier in the day.
These variations show how the market is highly vulnerable to expectations regarding the Chinese economy.
Rising stocks and lower demand
A combination of rising inventories and reduced demand at Chinese steel mills is fueling market pessimism.
As Atilla Widnell, managing director of Navigate Commodities, explained, the steady increase in cargo arrivals in China is expected to increase port inventories, keeping prices under pressure.
Chinese consultancy Mysteel echoes this view: there is a prolonged supply surplus in the local market, with global miners increasing production while demand from Chinese mills declines.
This reinforces the forecast that prices will remain under pressure throughout 2025.
Monetary policy in the spotlight
Another factor influencing the market is expectations surrounding Chinese monetary policies.
Optimistic traders were betting on interest rate cuts as early as 2024.
However, the People's Bank of China has indicated that measures such as reducing reserve requirements and interest rates should only occur “at an appropriate time”, which suggests possible changes only from March 2025.
This postponement creates uncertainty among investors and adds pressure to the iron ore market.
The lack of more immediate stimuli makes the scenario more challenging for the sector, directly impacting companies like Vale, which depend on the Chinese market for a large part of their revenue.
Impacts for mining companies and future strategies
Giants like Vale, Rio Tinto and BHP face a dilemma.
Rising global iron ore production may not find enough buyers in China, leading to a possible drop in profitability.
On the other hand, the need to diversify markets becomes more relevant than ever.
In the case of Vale, the situation on the stock market reflects these uncertainties.
On Tuesday, the mining company's shares on B3 registered a devaluation, closing the trading session at R$52,05 – a drop of 0,97% compared to the previous close.
Analysts point out that the performance is directly linked to concerns about Chinese demand and the global outlook for iron ore.
According to experts, mining companies Those who invest in technology and sustainable solutions can have a competitive advantage in this new scenario.
Investing in higher value-added products and alternative markets will be essential to face the sector’s turbulence.
The future of iron ore
With China's slowdown and global supply increasing, the iron ore market is undergoing an unprecedented transformation.
The end of the “golden era” requires companies to adapt quickly to survive a period of uncertainty.
Will we see a new era of consolidation in the sector or a complete transformation in the way iron ore is produced and traded?
It is necessary for large mining operators to invest in their transformation and stop selling the product in its natural state…
This nonsense you posted shows your immaturity on the subject! You are forgiven.
Sell to India!!!!!!
They are from the BRICS team… there won’t be a problem, right?
See?? Did you understand Lula's STRATEGIC VISION??
China, even if it reduces its purchases, will still need the product for its immense industrial park that supplies everything to the entire world!!
And being a PARTNER… guess who she will buy from??
From Australia or Brazil??