Iron ore prices have fallen sharply on Monday, March 23, as expectations of lower steel production and raw material consumption worldwide except in China have hurt sentiments and futures prices in China have fallen sharply. Fines with 62 percent Fe content have lost $6.5/mt today to $79.8/mt CFR, while ex-Brazil 65 percent Fe iron ore have also dropped by $6.5/mt, to $97/mt CFR.
Trading activity in China has been weak on Monday with no deals reported on trading platforms. Though iron ore inventories at Chinese ports are still going down as steelmakers have been increasing outputs, sentiments have worsened significantly. According to Moody’s Investors Service, the global economy will be hit significantly in 2020 due to regional lockdowns and, as a result, global iron ore demand will be hurt.
At the same time, there has been no disruption in supply of iron ore. Brazilian miner Vale announced last Friday that it will keep operating its blending centre in Malaysia despite the earlier expectation of its halt. Australian miners have also been working and have not reported lower shipments so far despite border controls. “Fortescue has been working closely with industry and government on the impact of travel restrictions on the resources sector. We commend the Western Australian state government on their decisive action to contain the spread of Covid-19 in our community,” said Elizabeth Gaines, CEO of FMG.
Iron ore futures at Dalian Commodity Exchange have today dropped by RMB 40/mt ($5.6/mt) or three percent to RMB 629/mt ($88.7/mt). Today, the exchange has increased daily change limits from six percent to seven percent for iron ore, coking coal and coke futures.
Moreover, rebar futures at Shanghai Future Exchange have declined by RMB 105/mt ($14.8/mt) today.