Global iron ore prices surge sharply by USD 5/MT in a month time. Positive sentiments, as well as favorable market conditions, have culminated prices to move up significantly.
Global iron ore market drives of the month
1. Global iron ore prices hit a 3-month high. Prime reason behind the surge in prices was a call for investigation for anti-dumping duties on iron ore imports from Australia and Brazil .
2. Chinese miners want an anti-dumping investigation into iron ore imported from the world’s top suppliers, complaining that low-cost majors namely Vale, and Rio Tinto and BHP Billiton are flooding the market.
3. Tighter steel supplies due to environmental inspection on steel mills in Beijing city has also supported global iron ore prices to move up. Alongside, there is also a restriction on using sintering in Tangshan which has also supported steel prices to drive up.
4. China imported 81.7 MnT of iron ore in Jun’16. This was 6% below May levels but 9% higher than a year ago. Export volumes from India continued to increase, encouraged by rising prices for seaborne material which may have made Indian low-grade ores competitive again
5. In July’16, world’s top most iron ore producers released production data. Brazilian Vale, world’s largest iron ore miner produced around 164 MnT iron ore in H1 2016, down by 1.4% as it was 166 MnT in H1 2015.The miner aims to produce around 340 MnT iron ore by the end of 2016.
6. Rio Tinto, the world’s second-largest iron ore miner produced around 160 MnT iron ore and shipped 158.9 MnT iron ore in H1 2016. The company expects its production from the Pilbara to be between 330 and 340 MnT in 2017 compared to a forecast of 330 MnT in 2016.
7. BHP Billiton misses its target guidance by 10 MnT for FY16. The miner produced 227 MnT iron ore during Australian FY16. Now, for FY17, the miner expects to produce between 228 and 237 MnT iron ore excluding production at Samarco.
8. FMG (Fortescue Metals Group), world’s 4th largest iron ore miner produced 91.2 MnT iron ore in H1 2016, up by 17.5% as it was 77.6 MnT in H1 2015. The average realized prices for Q4 FY16 was USD 48.7/MT. The cost of production at its mines had dropped by more than one-third to USD 14.3/MT from June quarter in FY15.
9. Indian iron ore fines offer for Fe 57/58% low-grade iron ore are hovering in the USD 35-36/MT, FoB India. Indian east coast based iron ore exporters namely Rungta Mines, Essel Mining, GS Mishra and few more exporters have started moving decent quantities of low-grade iron ore to ports.
9. China’s the world’s largest iron ore consumer, produced around 121.1 MnT ROM (run-of-mine) in June’16. Crude ore production was up by 9% M-o-M.
10. Stockpiles at major Chinese ports hit highest of 2016 at 107.3 MnT as on 29 Jul’16.
Major happening in steel market during the month
1. Sintering plants in Tangshan were ordered to cut output for the second half of Jul’16 so as to cut emission levels. Sinter plants and re-rollers that do not meet environmental protection requirement halted their production over 25-31 Jul’16.
2. Chinese domestic billet offers witnessed a waving pattern in Jul’16. Current offers for 150* 150 mm domestic billet are hovering at RMB 2,070/MT, Ex-Tangshan.
3. Chinese billet export offers have also witnessed a waving pattern in Jul’16. Export prices for 150 *150 mm billet was currently hovering at USD 310/MT, FoB China, down by USD 5/MT in a month time.
4. Heibi Iron and Steel Group, country’s biggest mill by production and Shougang Group will be combined together to form Northern China Steel Group. While Baosteel and Wuhan Steel will be merged into Southern China Steel Group
5. The small steel manufacturing companies will be later absorbed into two above steel giants in future. The mergers of steel giants in China indicates the strict measures that are being adopted by the Chinese government in a move to cut the country’s steel overcapacity.
6. Chinese domestic rebar prices are up by RMB 80-90/MT in a month time. Current offers for Shanghai rebar are around RMB 2,320/MT (USD 348/MT). On similar lines, rebar export offers are hovering at USD 337/MT, FoB China, up by USD 37/MT in a month time.
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