What to expect from Chinese iron ore and coking coal markets in 2025?

Supply Trends

• Iron Ore Supply:

  Iron ore supply is anticipated to increase in 2025, predominantly driven by expansions in Australia and Brazil, with more significant growth expected in the second half of the year.
  
  

• Coking Coal Production:

  Domestic coking coal production is expected to return to pre-2024 levels, with minimal impact from safety inspections in early 2025. Import pressures will remain high, influenced by Mongolian coal transportation capacities and India's diversion of Australian coal.
  
  

• Steel Supply:

  Key supply dynamics will revolve around policies addressing energy conservation and emissions reduction, shaping production levels and market availability.
  
  

Price Forecasts

• Iron Ore and Coking Coal:

  Both commodities are projected to face a surplus in 2025. Iron ore's surplus magnitude is expected to align with 2024 levels, while coking coal's surplus may intensify due to supply recovery. Forecasted annual price lows are $80-85/t for iron ore and approximately RMB 900/t ($123.7/t) for coking coal.
  
  

• Steel Prices:

  Scrap steel prices are projected to hit lows of RMB 1,800-1,850, with discounted rebar production costs ranging between RMB 2,780 and 2,840. The upper range of steel prices is estimated at RMB 3,600-3,650, influenced by market sentiment and production restriction policies. Hot-rolled coil (HRC) prices are expected to increase by RMB 100-150 within this range.
  
  

Conclusion: The steel market in 2024-2025 is poised for challenges, with subdued domestic demand in construction and potential growth in non-construction sectors driven by targeted policies. Export markets will remain crucial for mitigating weak domestic performance. On the supply side, increasing production of iron ore and coking coal is expected to exert downward pressure on prices, with policy measures and energy considerations playing pivotal roles in shaping the market landscape.

Note: This article has been written in accordance with an article exchange agreement between Horizon insights and BigMint.