Tuesday, May 31,
Spot iron ore prices are hitting the two-month low and buyers are refraining from building stocks of iron ore.
Fe 63.5/63 of Indian cargo is heard being quoted at between $177-$178/MT.
A lot of factors are influencing the spot market for iron ore in China at present. A few of them are as follows:
- The Steel output is very high as compared to demand and it’s simply too much for the local market to absorb
- Thinner appetite from Chinese steel mills as they have abundant stock for imported iron ore
- Bigger price gap between China’s domestic & importer iron ore makes buyers stick to domestic ore
- Rising stock piles at China’s major ports which has reached to a peak
- Anticipated rise in electricity prices by about 3%, the first increase since 2009 might lower the production levels.
All these factors suggest that the trading activities might remain on a lower side in the coming month and prices might decline further. However, prices may not collapse given by the factor that supply from India is expected to remain low during the monsoons.
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