Global iron ore prices hit 22-month low, NMDC shares under pressure

China's steel consumption has been reeling under a prolonged slowdown in the real estate business, and while it has resorted to export more, the iron ore market has currently seeing a situation of excess supply.

International iron ore prices slipped below the $90 per tonne mark on September 9, to hit a 22-month low as continued weakness in Chinese demand weighs on prices. The weakness in global prices is reflecting in shares of Indian iron ore producers like NMDC, sending them down by over 2 percent in mid-day trade.

Many global metal analysts do not see major improvement in China's demand of steel and steel products, and thus expect production to stay subdued, further squeezing prices lower.

China was responsible for approximately 54% of the world's crude steel production in 2023.

China's steel consumption has been reeling under a prolonged slowdown in the real estate business, and while it has resorted to exporting more of the commodity outside of China, the iron ore market has currently seeing a situation of excess supply, say expert.

Recent measures to fire up China's real estate demand through a potential stimulus have not yielded significant results, and the economic activity remains muted. China's yuan too has slipped against the US Dollar to a new record on growth concerns. Just last week, India had overtaken China's weightage on the MSCI Emerging Markets Investable Market Index, reflecting outflows at a time when India's fundamentals and corporate earnings are offering greater promise.

On Friday, Yi Gang, a former Governor of People’s Bank of China has raised concerns over deflation, asking authorities to focus on this factor as falling prices run the risk of denting growth outlook.

In 2024, the global steel demand is expected to rise by 1.9% but in China, analysts are projecting a continued slowdown in demand.