Global iron ore prices are assessed at USD 68.7/MT, CFR China on 21 Apr’16. Prices are currently at 16-months high as they are last seen at such level in the month of January 2015.
From starting 2016, prices followed an uptrend of around 64%. Starting 2016, prices were witnessed at level of USD 43/MT, CFR China and now they touched to a level of USD 69/MT, CFR China within 3 months of time.
Sharp surge in Chinese spot steel prices have drifted global iron ore prices. Chinese billet and Shanghai rebar prices are moving up abnormally. Tighter supplies following plant shutdowns last year, restocking by consumers and a pick-up in seasonal demand have combined to lift steel prices in China. Today, billet prices in Tangshan jumped RMB 60/MT (USD 9.2/MT) and rebar prices were up by RMB 85/MT (USD 13/MT).
Today, Chinese domestic billet offers have reached to the level of RMB 2,640/MT (USD 406/MT) in contrast to yesterday’s offer at RMB 2,560/MT (USD 397/MT).Current offers have hit 20-month high level , which was last reported on 22 Aug’14. Lack of inventory levels with mill operators and pick up in seasonal demand have been continuously increasing billet prices in nation’s local market since the starting of this month.
On the other hand, due to International Horticulture Exposition in Tangshan, Chinese govt. have announced a production cut between Apr’16- May’16, because of which Chinese steel makers have started producing steel and restocking it. Because of which, steelmakers are restocking iron ore to feed their steel mills.
According to market sources” Mills in Tangshan will be required to cut sintering operations by 30% over April 22-26, and by 50% from April 27 till May 3 to improve air quality for the International Horticultural Exposition hosted by the city”.
Meanwhile, recent production cut by world’s top four miners also supported prices.It appears that the supply cut announced for this year by BHP (by 10 MnT) and Vale(by 10 MnT have been enough to give a sense that the iron ore market has tightened enough to support prices.
Apparently, still some iron ore miners and market analyst anticipates that this sharp surge in global iron ore prices is unsustainable. Once, the International Chinese Horticulture Exposition gets over by the end of May, this price rally will again last and prices may drop down to a level of 45-50/MT.
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