Having moved up last week, prices of ex-Australia iron ore with 62 percent Fe content for delivery to China’s Qingdao port have increased to $93.81-94.91/mt on the first working day of the current week. As of April 4, inventory of iron ore at 45 major Chinese ports amounted to 148.4 million mt, up 1.4 million mt or one percent week on week, as announced by MySteel. It is observed that inventory levels of traders indicated a significant rise in the given period.
Last week, global iron ore prices moved up significantly amid the ongoing shortages in iron ore supply and influenced by the acceleration of domestic finished steel demand in China due to seasonal reasons. Prices of ex-Australia iron ore with 62 percent Fe content for delivery to China’s Qingdao port increased by 5.59 percent last week and closed the week at $91.41-92.51/mt CFR China, while export offers for high quality iron ore with 65 percent Fe content from Brazil moved up by 4.12 percent in this period and closed last week at $102.96-103.86/mt CFR China.
It is observed that on the first working day of the current week the futures exchange markets in China have increased rapidly. With iron ore prices at Dalian Commodity Exchange increasing to record levels, share values of of mining companies have moved up by 1.7 percent. Accordingly, share values of BHP Group, Rio Tinto and Fortescue Metal Group have indicated increases of 1.4 percent, 1.5 percent and 2.8 percent, respectively.
Trading activity in the Chinese steel markets is observed to be accelerating, causing raw material demand to increase, after China mostly lifted its winter production restrictions, which had been imposed in order to protect the environment. CMC Markets chief market analyst Micheal McCarthy commented, “Prices of most fundamental commodities are on an uptrend and that would see continued support for the miners,” adding, “Raw material prices continue to move up and there could be further gains in the sector.”
Market sources expect that restocking activities for raw material in China will continue for some time due to livelier domestic finished steel demand and that this will push up raw material prices further. On the other hand, market sources do not think that this uptrend of raw material quotations will be long-lived since domestic finished steel demand in China traditionally declines, when hot weather conditions prevail in the country.