WEAK CHINESE DEMAND PUSHES IRON ORE PRICES TO MAY LOW

China's iron ore prices fell to a five-month low, as weak demand added to evidence that the country's economic recovery from tough coronavirus lockdowns may be faltering.

WEAK CHINESE DEMAND PUSHES IRON ORE PRICES TO MAY LOW

China's iron ore prices fell to may low, as weak demand added to evidence that the country's economic recovery from tough coronavirus lockdowns may be faltering.

After steel production surged in the first quarter, optimism and post-lockdown activity waned, leading to a "crash" in the steel market and raising questions about the durability of the recovery. Chinese economic recovery.

Iron prices for delivery to the northern Chinese port of Qingdao fell to $102.7 last week, down 23% from recent highs in March, recovering slightly to $107.9 late on Monday.

The benchmark is seen as an important pricing factor for the global market as China is the world's largest consumer of iron ore, a key raw material for steel production. Iron ore is also a major profit driver for Western miners such as BHP, Rio Tinto and Vale.

Usually March and April are peak production months for the Chinese steel market, but this year the country's mills cut output in April as falling steel demand made it difficult for them to make a profit.

In the first quarter, steel output at Chinese mills was 6.1% higher year-on-year to 262 million tons, but customer orders did not keep up, according to the China Iron and Steel Association. .

Steel demand has been falling since the beginning of April,” said a trader in Hong Kong. “The market expects infrastructure steel demand to grow by 10% this year, but our most optimistic estimate is 2%.

China's manufacturing activity slowed in April, with the purchasing managers' index, which measures industry activity, falling from 51.9 in March to 49.2 in April. A reading below 50 indicates a contraction. again.

In the construction sector, which accounts for about half of China's steel demand, growth was slower than expected. Newly started real estate in March fell 29.1% year-on-year.

Steel demand from the automotive sector, which accounts for 10 to 15 percent of China's steel consumption, is also weak.

The slowdown in the manufacturing and construction sectors comes despite last month China reporting quarterly GDP growth of 4.5%, beating analysts' expectations for a 4% rise. However, many investors have become concerned about whether the growth rate can be sustained.

According to the World Steel Association, China's steel production last year fell 2% to 1.01 billion tons, partly due to government-mandated production cuts.

A source close to the NDRC said the iron ore outlook is down and China's steel demand is expected to peak soon. This person said: “Demand is facing collapse.

In early March, the NDRC published warning statements blaming “market speculation” for driving prices up, and in April the agency warned futures traders not to “ inflated iron ore prices, and said the agency would strengthen market supervision.

For miners like Rio Tinto, BHP and Vale selling iron ore to China, their production remains profitable at current prices.

Trần Ban( TLE)