What‘s driving iron ore prices higher against seasonality?

Diverging from recent years’ seasonality, iron ore prices delivered to China have been rallying since August.

iron ore prices higher against seasonality

After trading intraday above the 130-mark, month+2 contract is approaching 2023 highs. The rally seems to be responding to the unseasonal destocking of iron ore at Chinese ports over the Summer and the equally unseasonal slowdown of iron ore mining output in China over that same period. Reacting to ever thinner steel production margins, it seems that China’s steel industry adopted a “just-in-time” approach! Whilst it reduces immobilized capital in iron ore stocks, it also supports ore prices and transfers the stress once absorbed by the stocks buffer onto the seaborne logistics! This means freight rates volatility.

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