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Iron ore prices steadied on Friday while a rising portside inventory in China, along with softened demand, signaled prices could weaken in 2022.

According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were changing hands for $108.03 a tonne during afternoon trading.

Iron ore for May delivery on China’s Dalian Commodity Exchange ended daytime trade 0.7% lower at 639.50 yuan ($100.46) a tonne.

The spot price of iron ore for delivery to north China has surged almost 25% over the past three weeks.

Meanwhile, Chinese customs data on December 7 reported November iron ore imports of 104.96 million tonnes, up 14.6% from October and the strongest month since July 2020.

“The iron ore port inventories build through recent weeks is a bearish signal and they are expected to continue to lift over the next 2-3 months as pig iron production is not likely to pick up until after the (Beijing) Winter Olympics,” Westpac senior economist Justin Smirk said in a note.

While falling steel inventories in China may signal an improvement in downstream demand, Smirk said current levels were still at a five-year high, suggesting “it has a long way to go before it signals a tight market.”

Iron ore prices could drop to $75 a tonne by the end of 2022, he said, as tight steel production controls to curb emissions in China are likely to remain in place.

“The market appears to be positioning for a rebound in steel demand in the first half of 2022, built on expectations that Beijing will once again open the stimulus taps to boost economic growth,” wrote Reuters columnist Clyde Russell.

“Overall, it would appear that iron ore prices are rebounding on the expectation of future demand, and are happy to ignore the current signs that there is too much of the raw material arriving in China.”

(With files from Reuters)