Australian Iron Ore Giants Tumble as Price Slump Deepens Amid Weak Demand

Australian iron ore producers, including giants BHP and Rio Tinto, saw their stock prices fall as iron ore prices continued to decline. The benchmark 62% iron ore futures on the Singapore Exchange dropped for the sixth time in seven days on Wednesday, closing at $96.20 per ton, a 2.4% decrease.

The Australian market reacted with BHP Group falling by 2.3%, Fortescue by 2.9%, Rio Tinto by 2.1%, Champion Iron by 3.2%, and Mineral Resources by 1.1%. The S&P/ASX 200 Materials Index fell by 1%, while other sectors within the Australian market experienced gains.

On the supply side, there was a slight decrease in global shipments, with Australian shipments also seeing a minor decline. However, Brazilian iron ore shipments rebounded. Port arrivals saw a slight decrease overall, indicating relatively stable supply levels.

Demand, however, is weakening. Daily pig iron production fell to 2.317 million tons, down by 49,200 tons compared to the previous period. The end market remains sluggish, and a pessimistic outlook prevails as steel mills face increasing losses. The likelihood of blast furnace maintenance is rising, further weakening demand for iron ore.

Inventory levels also showed changes. According to Mysteel, the total iron ore inventory at 45 major ports nationwide decreased by 463,500 tons, reaching a total of 150.4396 million tons. Daily port throughput rose by 9,630 tons to 3.0802 million tons.

Analysts observe that the iron ore market is currently characterized by strong supply and weak demand. Recently, global iron ore shipments slightly increased, while port arrivals saw a notable rise. Specifically, global iron ore shipments reached 30.69 million tons, up by 500,000 tons. The total shipments from Australia and Brazil amounted to 25.359 million tons, increasing by 483,000 tons. Meanwhile, China's 45-port arrival volume increased by 7.887 million tons.

The market remains pessimistic, with expectations of further reductions in pig iron production due to increased maintenance at steel mills. The profitability of 247 steel mills continues to decline, with only 5.19% currently operating at a profit, the lowest level since late 2015.

The continuous decline in iron ore prices reflects the market's negative feedback loop. The weak demand and steady supply indicate that iron ore prices are likely to remain volatile and biased toward weakness in the short term.