Melbourne — High iron ore prices are tipped to continue into Q2, supported by rising steel production and reduced steel inventories, according to the latest S&P Global Platts Iron Ore & Steel Outlook.
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Some 61% of participants said iron ore prices will range over $140-$160/mt CFR in Q2, with 17% seeing them higher at $160-$180/mt.
A majority 65% expect iron ore requirements to be higher than in Q1, while 22% thought they would be lower, according to research carried out by Platts.
From the start of 2021 to March 23, the Platts 62% Fe benchmark IODEX has averaged $167/mt.
Interestingly, 61% of respondents thought crude steel production would increase in Q2. This is despite a near 13% year on year increase over January-February to 175 million mt, according to the National Bureau of Statistics.
But the rise in crude steel output will be offset by falling inventories, the Outlook found, with 91% of participants expecting steel stocks to decline.
Platts Analytics expects steel demand to be well supported in the first half of this year before softening in the second half, as policy tightening measures start to take effect. Steel output cuts are likely to occur in the second half given weaker demand compared with H1.
The Chinese government allowed ferrous scrap imports to resume at the start of this year, and 92% of respondents thought imports would be higher this year as a result. But views on whether a lift in scrap usage would lessen demand for iron ore were mixed. Some 40% thought scrap would have an impact, while 30% thought they would not and a further 30% were unsure.
Views were also mixed regarding the spread between benchmark 62% Fe ores and higher and lower material -- with the outlook roughly half and half.
Platts spoke to 23 companies for the Q2 Outlook, comprising Chinese mills, domestic and international traders and mining companies.