Monday, February 07,
Thin spot iron ore trading activity on Monday kept prices steady in China.
Prices are expected to resume their rally when the Chinese markets reopen on Wednesday on persistent worries about tight supplies through the first half of 2011.
“There is little expansion potential in the global supply chain while rampant Chinese steel production growth is bolstering demand conditions,” Macquarie Research said in a note.
“We would expect the price to keep edging upwards post Chinese New Year, with $200/tonne in sight.”
The sharp decline in Brazil’s iron ore exports last month along with continuously tight cargoes from India suggest that the iron ore market “will remain in an extremely tight situation” in the first half of the year, said Macquarie.
This could open the way for more exports from smaller suppliers led by Iran.
“As a result, 2011 is set to be a year where incremental tonnages from smaller suppliers will be crucial in keeping the market in balance amid immediate need for iron units to balance the books,” said Macquarie.
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