Iron ore prices have dropped due to gloomy outlook for demand for steel products and raw materials in China.
The best-selling January contract for the supply of iron ore on the Dalian Commodity Exchange ended in daytime trading 5.1% lower at 511.50 yuan ($ 80.21) a tonne after touching 510.50 yuan at the start of the session, the very low level from November 4, 2020.
"The price of iron ore has not yet bottomed out," analysts at Zhongzhou Futures Co Ltd wrote in a weekly note, citing the continued decline in China's steel production in line with its decarbonization targets and unrest in the country's real estate sector.
China's monthly steel production has been declining since July after posting double-digit growth in the first half of the year as tight production controls and energy caps negatively affected both supply and demand.
Steel production in the country from January to October amounted to 877.05 million tons, down 0.7% year on year.
The surge in iron ore supply, as imported materials held in Chinese ports last week surged to a 31-month high of 147.60 million tonnes, according to consulting firm SteelHome, has also increased pressure on prices.
Market analyst Fitch Solutions recently revised its iron ore price forecast from $ 170 per tonne in 2021 and $ 130 per tonne in 2022 to $ 155 per tonne and $ 110 per tonne, respectively.
Over the longer term, Fitch forecasts prices to fall to $ 65 per tonne by 2025 and to $ 52 per tonne by 2030.