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Kuusakoski: Iron prices fell to a two-year low

Kuusakoski: цены на железо упали до двухлетнего минимума

Iron prices have fallen to their lowest level in two years, the Kuusakoski company's press service reported on Monday. Car dump. Car dump. Photo: Taavi Sepp

Iron prices have fallen to their lowest level in two years, the Kuusakoski company's press service reported on Monday.

When the European Central Bank recently cut interest rates, it immediately sent financial markets higher. The US Federal Reserve took an even more decisive step by cutting its benchmark interest rate by 50 basis points, which also sent stock markets higher. The question now is how long this effect will last.

"Unfortunately, it seems that this momentum is not enough for long-term growth, and all attention is focused on the economic growth of the US and China… or their decline. Two steps forward, two steps back," Kuusakoski board member Toomas Kollamaa said in a commentary.

China has been grappling with a weakened property market, slowing growth and deteriorating consumer sentiment with unusual consistency, Kollamaa said, adding to fears of deflation and leading to a general decline in demand for metals, sending iron prices to their lowest in two years.

Goldman Sachs has cut its iron ore and copper price forecasts for next year as industrial production and construction, as well as the transition to a green economy, are not growing at the speed expected, leaving a surplus. Meanwhile, the world’s largest miner BHP predicts that the artificial intelligence boom will likely worsen the copper deficit, with more energy-intensive data processing increasing global copper demand to alarming levels.

BHP estimates that the growth of data centres and artificial intelligence solutions could increase global copper demand by 3.4 million tonnes per year by 2050. Data centres currently account for less than 1% of copper demand, but this is expected to grow to 6-7% by 2050. Data centres themselves are consuming less copper, but the electricity they supply remains copper-intensive. BHP forecasts that global copper demand will grow to 52.5 million tonnes per year by 2050, up from 30.4 million tonnes in 2021, representing growth of 72%.

This forecast is supported by Bank of America (BofA) Securities, which predicts that copper prices will rise next year and iron ore prices will fall.

Nickel also continues to fall, and its price is unusually low due to large global reserves. One reason may be the increasing focus on scrap metal recycling, which reduces demand for new raw materials. On the other hand, despite the declining economy, the price of aluminum remains relatively stable.

The Estonian scrap metal market is 350,000–400,000 tonnes per year. Kuusakoski is the largest provider of circular economy services in Estonia, recycling approximately half of the country’s scrap metal. The company has 12 service points across the country: in Jõhvi, Narva, Paide, Haapsalu, Paldiski, Pärnu, Rakvere, Rapla, Tallinn, Tartu, Viljandi and Võru.

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