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Mining market on alert: High demand from China, the largest global consumer of iron ore, drives down iron ore prices
According to InfoMoney, the mining market was impacted again in August. Iron ore futures prices fell for the second day in a row, pressured by low demand from China, the world's largest consumer. Furthermore, the high supply added more weight to the scenario, causing a significant drop in prices.
These concerns don't come out of nowhere. The most traded January iron ore contract on the Dalian Commodity Exchange (DCE) closed the day down 2,41%, at 749 yuan (104,32 dollars) per ton. This is the lowest value since August 2, reinforcing uncertainties about the health of the Chinese steel market. In parallel, on the Singapore Exchange, the September contract fell 1,75%, reaching 101,05 dollars per ton, which also marks the lowest value since the beginning of August.
Slowing steel market and doubts about the capacity of China's steel exports worsen the scenario for iron ore
However, concerns in mining do not end there. According to analysts at First Futures, a significant increase in prices is unlikely to occur as long as the steel market continues to slow. Furthermore, doubts about the ability of China's steel exports to maintain a strong pace in the second half of the year further worsen the scenario for iron ore.
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Additionally, China's iron ore imports rose 5,3% in July compared to the previous month, reaching the highest level in six months. This occurred as mining companies rushed to meet quarterly shipment targets, and steel mills' margins improved. However, China's flood of steel exports may slow in the coming months, raising concerns about continued demand for iron ore in the mining sector.
Mining: As mining companies race to meet targets, the market watches cautiously. Uncertainty over steel exports and the cut in Chinese steel production are critical factors that will determine the future direction of the market. A steel producer based in eastern China, who declined to be named, highlighted that he is closely monitoring these changes.
