The Metallurgical Mines Association of China, or MMAC, has forecast that the average seaborne iron ore price in 2017 will rise moderately from this year to over $60/dry mt CFR China.
Vice chairman of MMAC, Lei Pingxi, said at a meeting with the association members on Sunday that supply in 2017 was not expected to increase by much, while demand looked to remain largely steady or improve slightly which would lead to slight rise in the average price of iron ore to around $50-$70/dmt CFR China.
The S&P Global Platts 62%-Fe iron ore assessment, or IODEX, had dived to $38.75/dmt CFR North China on January 14, 2016, but surged to $84.45/dmt CFR North China on December 12, data showed. As of Sunday, the year-to-date average for the index was $57.66/dmt CFR North China, Platts data showed.
Participants in the Chinese iron ore market agreed that average prices in 2017 will strengthen slightly from 2016, amid continued pollution control efforts, reigning in of overcapacity and consolidation within the steel industry which is likely to cap steel output.
"Steel and iron ore prices are closely related due to thin production margin for finished steel, [and] better steel prices in general next year will definitely be supportive for iron ore," a procurement official from a steel mill in north China's Hebei province said.
Over January-November 2016, China's crude steel output rose 1.1% year on year to 738.9 million mt, according to China's National Bureau of Statistics, or NBS.
China's steel consumption in 2017 is expected to decline at a slower rate of 1% year on year, as faster growth in the country's infrastructure sector will offset slowdown in the property and auto sectors, Lei said.
Over January-October, China's apparent crude steel consumption inched up 0.7% year on year to 525.65 million mt, according to China Iron & Steel Association, or CISA.
China's iron ore production is expected to drop in 2017, though overseas supply will rise moderately, sources said.
China's domestic iron ore miners which have been forced to halt or cut down production since second-half 2014 as they were facing mounting losses, were unlikely to resume operations soon unless there was a sustainable uptrend in prices, they added.
"China's domestic iron ore output will still decrease year on year, and the domestic concentrates supply, thus, is expected to be down 10 million mt, or 4%-5% on year," Lei said.
Over January-October, China's domestic run-of-mine iron ore production fell 3.6% year on year to 1.16 billion mt, according to NBS.
Overseas suppliers, however, are expected to increase output by just 1.5% year on year, or 30 million mt, in 2017.
There will be some closures, but this is expected to be offset by 20 million mt of new supply from Vale's 90 million mt/year S11D project when it is commissioned, and another 20 million-25 million mt from Australia's 55 million mt/year Roy Hill project, he added. - Platts