Global iron ore prices remained almost stable throughout the month. Starting Sept’15, spot iron ore fines prices began with USD 56/MT, CFR China remained in the range of USD 55-57/MT, CFR China and finally ended today at USD 54.4/MT, CFR China.
China iron ore market is still very cold. Market participants anticipate that prices may fall further in the coming months.
Weak steel demand in China is continuously pressurizing iron ore prices. Due to this, few Chinese mills have already slashed their prices in order to sustain in the market and stimulate sales. Currently, there is no profit to manufacturers on steel.
Chinese market will remain closed starting 1 Oct to 7 Oct on account of National Day Holiday.
Highlights of the month
1. In first half of Sept’15, spot iron ore prices lifted up slightly. This was since China iron ore imports were affected due to explosion on at Tianjin Port, which halted movement of iron ore cargoes. This led to lesser imports in Aug’15, resulting in less availability of iron ore in starting of this month which lifted spot iron ore prices.
2. In second half of Sept’15, China iron ore market remained almost stable at USD 56- 57/MT. Reasons for stable prices were no-pick up in demand post-monsoon. Another reason for stable prices was China’s annual conference held in 3rd week of Sept’15. Usually, this conference presents a nice platform for traders to make profitable deals, but due to weak demand, the conference was not remained much beneficial to them.
3. Gina Rinehart’s Roy Hill iron ore project is all set to make its first shipment by next month. This could result in over supply of iron ore and erode the prices, which may slump to USD 40/MT in the coming months. The project will flow around 55 MnT iron ore in the market.
4. Iron ore inventories at major Chinese ports reached 84.52 MnT till 25 Sept’15, up by 2% starting Sept’15. Analysts forecast further increase in port inventories in the coming weeks.
5. Inspite of weak demand and slow economic growth, steel exports from China geared up in first eight months of the year as Chinese mills opted to produce more steel. Recently, steel exports from China have shown signs of entering a declining phase. Export is becoming unviable not only due to weak domestic demand, but also because overseas prices are already lower than export offers.
6. On 30th Sept’15, Shanghai rebar hit record low prices at USD 288/MT. In Aug’15, it hit an all time low of USD 304.5/MT. Major reason was slow Chinese economic growth and lesser steel production.
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