Iron ore prices switch to upward trend
Having closed last week with an upward movement, prices of ex-Australia iron ore of 62 percent Fe content for delivery to China’s Qingdao port have increased by $0.4/mt on Monday, October 16, compared to last Friday, starting the current week at $62.55-63.25/mt CFR China. As of September 30, inventory of iron ore at Chinese ports amounted to 133.4 million mt, down 0.46 percent month-on-month and increased by 25.44 percent year-on-year, as announced crude steel production cuts in China within the scope of environmental protection measures exerted pressure on global iron ore prices. Also, rainy weather conditions in the country negatively impacted the sales of iron ore and finished steel. On Friday last week, raw material and finished steel prices in China started to increase in line with the uptrend of futures market. However, global iron ore prices declined by one percent as compared to the previous week due to the sharp declines recorded during the week in question.
Global iron ore prices have started this week with an upward movement due to the ongoing crude steel production cuts and the uptrend of futures market in China. In the coming period, the production cuts in question are expected to pull down iron ore consumption and to provide support for semi-finished and finished steel prices in the country. Therefore, global iron ore prices are expected to fluctuate at $60-65/mt CFR China in short term.
Meanwhile, according to Deutsche Bank’s report, Chinese steel production increased by 5-6 percent in the first eight months of the year, while steel production in China in July and August has been stronger than the usual historical seasonal patterns. According to the report, the uptrend of iron ore prices recorded in the third quarter this year was attributed to higher than usual demand in the third quarter -which is traditionally expected in the fourth quarter- in anticipation of the winter restrictions. Also, Chinese government’s efforts to reduce pollution and improve air quality are expected to persist for at least the next five years.
*This was published on SteelOrbis website on October 16, 2017.