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Iron Ore Drops With Steel Demand Set to Weaken in 2022

Iron Ore Drops With Steel Demand Set to Weaken in 2022
(Bloomberg) – Iron ore fell as investors believed steel raw material would face a surplus next year.
Singapore futures fell 5.4% on Monday, the most in a month, after six weeks of gains. Iron ore has found support from measures taken by Chinese authorities to support the real estate sector, along with expectations of further fiscal stimulus and expectations of a rebound in steel production this month.

“We believe that the aggregate supply and demand for iron ore will ease further in 2022,” analysts from China International Capital Corp said. Zhilu Wang and Chaohui Guo in a note. They said they expected steel consumption in 2022 to drop 1.2% from last year, driven by a weaker construction sector and government carbon targets, and an increase of 25 million tonnes of shipments from the main miners.
The comments echo predictions from the government-backed China Metallurgical Industry Planning and Research Institute, which said steel consumption will fall 4.7 percent in 2022.

Still, “if real estate investment rebounds more than expected or if the constraint on steel production is weaker than expected, iron ore prices could stay above $ 100,” CICC analysts said. .
Also weighing on markets, China over the weekend reported the most local virus cases since January. An epidemic in Shaanxi province is emerging as one of China’s biggest challenges to date for its zero Covid policy.
Iron ore in Singapore was down 4.1% to $ 122.15 a tonne as of 2:57 p.m. local time, after rising 6.3% last week. Prices in Dalian also fell, while futures on steel rebar and hot-rolled coil eased in Shanghai.
Dec 28, 2021 11:02
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