Iron ore futures were a touch softer on Monday morning in London as steel mills wrap up iron ore buying as the holiday approaches. According to a survey conducted by Mysteel, the average trading volume among the 52 ore traders interviewed had dropped to 1.46 million tonnes/day over the past week.
According to analysts at Bloomberg Intelligence, lower worldwide steel demand and destocking amid high Chinese iron ore inventories could see iron ore prices weaken in 2020.
The sentiment is echoed by analysts at Wood Mackenzie who expect iron ore prices to fall to average $80 per tonne this year. Wood Mackenzie also expects spread between high-grade and benchmark ore to rise from 12% to 14%, although noting that further steel margin compression if prices remain at current high level could limit the scope for higher premium for high grade iron ore.
The most active iron ore contract for May 2020 delivery on Dalian Commodity Exchange (DCE) was down 2.5 yuan to close at 670.0 yuan per tonne. In Singapore, the morning London DCE session was a quiet one. Feb was seen down as low as 94.05 (versus 94.65 as per Friday’s close).