ASIAN IRON ORE MARKET 2024 REVIEW: Easing demand for mainstream fines weighs on prices

Platts 62% Fe IODEX averaged $109.44/dmt in 2024 despite kicking off the year on a strong note at $143.20/dmt Jan. 2. Persistently negative mill margins coupled with lackluster finished steel demand saw iron ore prices fall to a 23-month low at $89.35/dmt on Sept. 23 before recovering slightly to close at $100/dmt Dec. 31, data from Platts, part of S&P Global Commodity Insights, showed.

Looking at 2025, the Australian cyclone season has been more damaging than usual, with January shipments down by around 5%, according to preliminary port data. And while construction activity in China typically resumes in the second quarter, Commodity Insights analysts expect 2025 iron ore prices to come under further pressure with the iron ore trade balance moving into surplus on the likely ramp-up in seaborne supply to mitigate the cyclone's impact and the anticipated first export from the Simandou project.

Cost-cutting via lower iron content feed

In 2024, high raw material costs increased the interest among Chinese buyers for sinter fines with a lower iron content of about 58% Fe and various other non-mainstream, off-specification cargoes. Platts observed 113 deals during the year, or 12.4% of the total number of sinter fines deals, involving cargoes with iron content below 58%, up from 9.9% in the previous year.

Conversely, the number of deals involving high-grade sinter fines with an iron content of about 65% Fe accounted for only 47, or 5%, of the total number of deals observed in 2024, down from 5.7% in 2023, Platts data showed.

Among the lower-grade fines, Australia's Super Special Fines, Fortescue Blend Fines, Supplementary Product 10 Fines, Jinbao Fines and India's JSW and Rungta fines saw robust demand from end-users through the year, with their 62% Fe IODEX benchmark-linked discounts having consistently narrowed.

Moreover, miners continued to report strong prices on transactions of their 58% Fe and lower-grade material, reflecting heightened demand throughout the year.

Major iron ore miners also adapted their sales strategies in 2024 to match the demand transition; Platts data showed that Rio Tinto's sales of lower-grade fines accounted for 12.6% of its low- and medium-grade sales, with BHP at 10% and Brazil's Vale at 21.3%.

With a gradual reduction in the output of BHP's Yandi Fines and a renewed focus on serving term contractual customers, a stark decline in spot sales of that brand was also seen.

In 2023, Rio Tinto's percentage of total primary low-grade sales to medium-grade was 5.43%, BHP's was 13.85% and Vale's was 16.1%.

Vale, typically known for its flagship high-grade Iron Ore Carajas fines and medium-grade Brazilian Blend Fines, was also observed to have sold various lower-grade, non-mainstream iron content brands in 2024, reflecting the market's overall desire to suppress hot metal productivity.

Trades and pricing points

In total, Platts published 34,922 price-related headlines, or heards, containing iron ore price information, up 30.1% from 2023. This comprised information on fines, lump, pellet and concentrate.

Heards for deals involving seaborne cargoes numbered 1,149 last year, a 10.6% increase from 2023. Of the figure, 41 were for deals involving cargoes coloaded on the same vessel. Such cargoes were counted as one deal.

Fines accounted for 80.1% of the observed spot trades in the year, followed by lump at 14.3% and both pellet and concentrate at 2.8% each.

Conversely, Platts observed 2,887 spot transactions for portside iron ore, down 5.7% from 2023. Fines accounted for 80.5% of the observed Chinese domestic spot trades in 2024, while lump trades accounted for around 10.3%, domestic concentrates at around 9.2%, and imported pellet and concentrate at around 0.1%. The year-on-year decline in the number of portside iron ore spot transactions was caused by import losses and overall declining consumption.

The volume of spot seaborne iron ore trades reported to Platts increased 8% year over year to 129.9 million mt in 2024.

In 2024, 54.2% of the trades reported to Platts resulted from the Platts journalistic survey of and verification with market participants. The remainder comprised deals reported by producers, bilaterally, or through major trading platforms during the Platts Market on Close assessment process.

An additional 33 international trading companies, 17 mining companies, seven international steel mills and two trading platforms contributed to price reporting.

Fixed-price trades continue to see recovery

The majority of seaborne, sinter fines spot transactions continued to be done on a floating-price basis throughout the year, as market participants continued to rely on the growing dollar-denominated financial derivative markets to manage price and counterparty risks in their physical exposure.

Due to spot prices having been lower in 2024 – with average 2024 prices down 8.6% from 2023 – the risks posed by taking on fixed-price exposure also reduced. The proportion of fixed-price transactions observed in 2024 accounted for 44% of all deals, up from 32% the year before.

This was the second straight year that the share of fixed-price deals rose.

The number of trades done on a floating price basis has hence reduced due to low fixed prices, hovering between $80-$90/dmt, with market sources noting limited room for more substantial declines past this range.

Appetite for fully transparent spot activity tapers

Price information reported on a fully transparent basis to Platts via the MOC fell to a total of 229 data points in 2024, from 775 data points in 2023, as spot material interest shifted toward the lower grade and off-specification brands that are typically bilaterally negotiated.

During the MOC, Platts prioritizes information reported on a named-and-firm basis that follows specific guidelines, to allow for the testing of price levels in the open market.

Throughout the year, 39 offers, three trades and two bids were reported via the MOC.

Spot buying concentrated mainly on off-specification and discounted material in 2024, resulting in decreased MOC activity year over year as the market moved away from mainstream brands.

The secondary market, where deals are often bilaterally negotiated, also offered a broader range of iron ore products and brands, many of which were resale cargoes from Chinese mills' long-term contracts.

The surplus of supply of both mainstream and non-mainstream brands in the secondary market amid constrained demand also contributed to the downward pressure on Platts IODEX.