Iron ore price correction delayed as global steel demand surpasses 2 billion tonnes for the first time ever
BMO points out that with global crude steel demand exceeding 2 billion tonnes for the very first time, and Beijing’s emissions restrictions being extended in the second half of the year, Chinese exports will be significantly lower than in recent months:
With a robust global demand environment and very little spare capacity available to restart, we see an environment in which global prices and industry margins remain well above cycle norms for the next 12-18 months. at least.
Certainly, there is potential for building an ‘annex to China’ steel capacity, with China-funded high carbon hot ends in ASEAN and Africa shipping semi-finished products to China. , but there will be a lag before these are operational. .
The market tightening will be most acute in the United States, as hot-rolled coil prices have already hit all-time highs near $ 1,600 per short ton. BMO expects US HRC prices to remain well above historical averages this year and next, although prices may decline slightly from today’s record highs in the second. semester 2021.
Although BMO has raised its short-term forecast for iron ore by more than 25% from previous estimates, the bank still expects benchmark steel feed prices to be $ 100 per tonne lower. to those today by the same time next year.