Iron is somewhat of an interesting commodity. It isn’t necessarily used for luxury items unlike gold, silver, diamond, or platinum. There are plenty more, but those are the main ones, and they are worth way more per pound. Iron is used for needs like appliances and cars, and the amount of supply is greater too. Iron is very useful in Minecraft, but let’s not get started on that.
Iron prices have been on a tear since 2020 along with other metals as demand is high, but supply chain constraints have been an issue caused by the pandemic. Floating around 75 dollars, the price managed to reach a high of nearly 250 dollars a couple of months ago, which is crazy for a commodity. Unfortunately, that’s where all the fun ended. Iron ore now sits at around 140 dollars per metric ton, which is roughly a 40 percent dip from its highs. This is because demand has been lacking from China, who uses iron to manufacture steel, and when they are the number 1 steel producer in the world, demand is key. Countries like Brazil and Australia are struggling as they depend on mining for their strong economic recovery. Many have expected this to happen, but not at such a rapid pace, and with China’s economic recovery slowing down, companies like Rio Tinto could be in trouble. Along with that, China is looking to restrain steel production as it accounts for 15 percent of their carbon footprint, which would hurt their goal of becoming carbon neutral. What do you think about the iron situation?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.