Iron ore prices begin the week with a sharp rise
Prices of ex-Australia iron ore of 62 percent Fe content for delivery to China’s Qingdao port have moved up by $5/mt on Monday, July 31, compared to last Friday, starting the current week at $73.15-73.85/mt CFR China. As of July 24, inventory of iron ore at 33 major Chinese ports amounted to 121.70 million mt, up 2.57 million mt or 2.16 percent compared to the inventory level recorded on July 17, as announced by China’s Xinhua News Agency.
Last week, global iron ore prices followed a fluctuating trend and increased by just 0.4 percent, since Chinese buyers have started to adopt a cautious stance in terms of making finished steel and raw material bookings as a result of the fluctuations in the futures markets. This slight increase in iron ore prices, which had indicated sharp and rapid increases since mid-June, was considered to herald the end of the recovery of iron ore prices. However, Chinese Premier Li Keqiang stated on Saturday, July 29, that China is fully committed to eliminating low-grade steel capacity produced by induction furnaces. The announcement has been viewed as a signal for upcoming production cuts – especially for long steel producers – and which would cause long steel supplies in the country to decrease, and has resulted in sharp price increases in the Chinese futures markets. Accordingly, iron ore prices have also started the current week with a sharp upward movement.
Meanwhile, market players have opposite forecasts on how long the impact of the positive sentiment resulting from the statement of the Chinese premier will last. Some market players think that Chinese buyers may increase their inventories due to the expected tightness of long steel supplies in the short term. On the other hand, other market players state that buyers already have high inventories and so they will adopt a cautious stance towards new bookings in order to see the impact of the latest developments.
*This was published on SteelOrbis website on July 31, 2017.