Lower demand for steel in China affects the price of iron ore

Steel demand in China is expected to fall 1.9 percent in 2017, putting pressure on prices for key steelmaking ingredients, including iron ore.

In China, the world's largest consumer and producer of steel, steel demand is projected to weaken to 660 million tonnes, said Li Xinchuang, president of the China Metallurgical Planning Research Institute.

The bust comes as Beijing applies tough reforms to cut its overcapacity. China's iron ore import demand has already risen 0.7 percent to 1.1 billion tonnes in 2016, with the country's dependence on imports for 87 percent of total demand, he said. Offshore supplies of iron ore will increase by about 50 million tons this year, about 10 million tons more than the forecast of the largest miner Rio Tinto.

As a result, the institute is forecasting iron ore prices between $ 55 and $ 90 per tonne in 2017, averaging around $ 65. Iron ore is currently trading at around $ 77.60, an increase of nearly 40 percent over last year. “What's in the future? We believe that the oversupply of global iron ore is very serious in the long term, ”Li said, but added that China will continue to be highly dependent on imports of iron ore.