Global iron ore prices start the week with sharp rise after previous gradual declines

Monday, 05 November 2018 17:16:05 (GMT+3)   |   Istanbul
       

Having increased by 3.97 percent two weeks ago and then decreased by 0.13 percent last week, prices of ex-Australia iron ore of 62 percent Fe content for delivery to China’s Qingdao port have moved up by $1.8/mt as of today, Monday, November 5, as compared to the closing price at the end of last week, starting the current week at $ 74.4-75.5/mt CFR China. Additionally, inventory of iron ore at Chinese ports continued to decline in the two weeks up to November 1, falling to 143.57 million mt.

Two weeks ago, prices of iron ore in the Chinese futures market and in the spot market moved upwards amid the Chinese government’s efforts to boost its national economy by increasing fixed asset investments in the third quarter and due to the speculative news about temporary production cuts and implementation of environmental measures. In this context, prices of iron ore of 62 percent increased to $76/mt CFR China and prices of iron ore of 65 percent reached $100/mt CFR China.

However, the upwards movement of iron ore prices was not sustained and prices switched to a downtrend last week, with consecutive declines. After the Chinese government announced the lowest manufacturing sector growth data of recent years, steel prices in both the futures and physical market declined. While these factors exerted pressure on global iron ore prices, Chinese steel mills’ capacity utilization rates decreased by 0.69 percent week on week. As a result, global iron ore prices moved downwards. Meanwhile, iron ore inventories at Chinese ports declined since Chinese steel producers increased their iron ore bookings from ports considering that shipments will be difficult in the winter period. Concerns over iron ore supplies due to the derailing of an iron ore train in Australia which travelled without a driver have led to the sharp increase in iron ore prices at the start of the current week.

After US president Donald Trump hinted at a truce in the trade war with China, Chinese President Xi Jinping stated that he will continue to be on the side of economic globalization and free trade. These statements did nothing to dispel the ongoing uncertainty regarding global trade tensions, which is expected to continue to impact steel prices in the futures and the physical markets. Accordingly, global iron ore prices may continue to fluctuate.


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