Iron ore price for Fe 62% fines has witnessed a decrease since the beginning of the last week. Benchmark index is assessed at USD 65/MT CFR, China today (21st May’18) fall of 4-5% W-o-W. It closed at USD 68.25/MT CFR, China last week on Monday 14th May’18. The downtrend in the seaborne iron ore prices due to softening steel prices and futures.
Reasons behind the decline in Chinese iron ore prices-:
1. Decline in futures – Chinese steel futures fell today to lowest since 7th May today. The benchmark in Shanghai rebars futures lost 1.8% on Monday (today 21st May’18). Dalian iron ore futures also fell more than 3%.
2. Traders are looking for a better discount – As buyers are still looking to get low alumina Brazilian iron ore (Carajas fines) resulted Australian iron ore piled up at ports. Australian cargoes were harder to sell at higher premiums. This may lead to the situation where buyers are looking to get the better discount.
3. Demand- Supply Mismatch – Steel demand dwindles while supplies are increasing in the market. China – world’s largest steel producer has registered growth of about 4% in crude steel output at 76.70 MnT Apr’18 in comparison to 73.98 MnT in Mar’18. Uncertainties in the future will largely depend on weather conditions. Inventories of rebar & wire rod stood at 2.51 MnT, down by 0.04 MnT against previous week.
4. Decline in domestic rebar prices – Domestic rebar prices fell by RMB 20/MT today against last week’s close. Prices fell amid limited trade activities.
However, Iron ore stocks at Chinese major ports stood at 158.98 MnT, down by 1.05 MnT W-o-W.
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