In Q2 2022, iron ore prices in China rebounded back to $160.69 per tonne ($/t) in early April, driven by supply concerns due to tight shipments and the escalating Russia–Ukraine war.
However, iron ore prices fell to $108.98/tonne in June with market confidence collapsing due to a severely damaged Chinese economy with repeated shutdowns across the country.
ArcelorMittal indicates that steel demand has been deteriorating as a result of tepid converter activity, historically high levels of steel stocks at both mills and traders’ warehouses, and inclement weather.
Demand outside of China also weakened with rising inflation and the tightening of monetary policy by the U.S. Federal Reserve.
Earlier, in Q1 2022, after an initial rise in iron ore prices to $161.65/mt in early March, driven mainly by bullish sentiment that Chinese steel production would accelerate following the government’s announcement of a 5.5% GDP growth target for 2022 and stimulus packages targeting the construction and infrastructure sectors, iron ore prices fell to $136.19/mt in mid-March following a sudden outbreak of Covid-19 in China and the implementation of tight closures.
Iron ore prices
In the first quarter of 2021, iron ore prices were supported by sustained Chinese demand, with a double-digit year-on-year increase in steel production, while seaborne supply saw its seasonal low.
Iron ore prices reached $167.40/t in Q1 and increased to $200.47/t in Q2 2021, supported by strong steel production around the world, including China, as a result of steel supply shortages coupled with the rapid post-Covid-19 recovery.
Then, in Q3 2021, the seaborne iron ore price lost $36/tonne compared to the previous quarter due to the strict carbon emission control conducted by the Chinese authorities, while supply remained stable.
The iron ore price hit a one-year low of $87.27/tonne in November due to a further reduction in steel production in China due to power shortages across the country, inspection of crude steel cutting and air quality control during the heating season.
Market sentiment was bolstered later in the year with the expected resumption of production and winter storage demand, boosting the price to $115.25/tonne in December 2021.