Iron Ore & Steel Outlook
Expert iron ore and steel market insights
Our quarterly iron ore and steel outlook is published in our Quarterly Metals Report, which covers base, precious and ferrous metals. The impact of supply and demand fundamentals and macroeconomic implications for the iron ore and steel futures and spot prices are analysed. Our research team produce iron ore and steel price range forecasts as part of the report.
Iron Ore & Steel Outlook – Q4 2022
Steel utilisation rates and average daily output in China ticked higher towards the end of September, but plant and social inventory are low and will fall even further into year-end. However, stocks are at much lower levels than in previous years, leading to material tightness and cap losses. Seaborne iron ore premiums will improve in the coming months, as lump premiums have done as iron ore imports rise ahead of restocking. Steel-intensive industries remain in negative growth, which will stay in the coming months, especially after the no-change to zero-Covid policy. Domestic mining of iron ore is set to improve in the long run to reduce China’s reliance on imported material, soft consumption will lead to lower iron ore prices...
The macroeconomic outlook is deteriorating, and in our view, Europe and the UK are in recession already, and the US will be 6 months behind. Higher interest rates, in conjunction with elevated energy and electricity prices, are squeezing households’ disposable income, and new mortgage rates are considerably higher and are now a fixed cost to the consumer. We expect end-user demand to decline, and this will have an impact across the whole supply-chain; although material availability is poor for metals with bonded and exchange warehouses low in stock, this will lead to a dislocated market and volatile price action in spreads, while the macro impacts the flat price. The 20th Party Congress has ended, and their COVID policy is here to stay. As a result, sentiment in China has declined, and if the output of refined materials rises, this will put further pressure on prices. The Fed has increased the rates by 75bps with 50bps to come, but investors are looking at where they pivot, and any dovish language will cause a selloff in the dollar, giving rise to metals prices. If Chinese demand returns and the dollar weakens, this could present significant volatility and price rises, compounded inflationary pressures.
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