From Abheek Bhattacharya:
Partly, steel mills and ports in China, the center of global demand, are stocking up on iron ore. But that is seasonal. Every year, China’s construction season begins in earnest around March. Traders likely bought ore in anticipation. But demand for the year may be weaker than expected. Steel mills as of February reported flat order books compared with January, according to Credit Suisse.
…..In the long term, however, China’s demand for iron ore depends not on its capacity to make steel, but on its demand to consume it. That demand is held hostage by the industrial slowdown. Chinese steel consumption actually fell last year, forcing the country’s steelmakers to export excess capacity…..
Steel consumption is largely driven by real estate development and infrastructure investment, both of which are likely to shrink in the next few years.