For most of June, iron ore prices traded above US$100 per tonne for the first time since August 2019. Strong Chinese demand was fueled by a sharp expansion in steel production, with a record monthly high breached in May. The prevailing tightness in supply has also underpinned high prices, with Brazilian exports at reduced levels amid a surge in coronavirus infections. Despite iron ore's bullish performance in June, we expect prices to ease back in the third quarter as a seasonal slowdown in Chinese steel production tempers demand.
- June saw iron ore prices breach US$100/t for the first time since August 2019.
- Chinese iron ore stocks were at multiyear lows in June. Despite a month-over-month fall in May, Chinese iron ore imports increased 5.1% year over year in January-May.
- Brazilian iron ore exports were down 29% year over year in May. We anticipate an improved second half, although Brazilian exports are still forecast to retreat 4.4% in 2020.
- January-April saw Australian exports climb 7.3% year over year, fueled by resurgent Chinese demand.
- Chinese iron ore stocks were at multiyear lows in June. Despite a month-over-month fall in May.
- Third-quarter prices are forecast to moderate to US$88/t, tempered by a seasonal slowdown in Chinese steel production.