Global iron ore prices have hit 2-month high and currently assessed at around USD 62/MT, CFR China on 25 Oct’16. Prices at such levels were last seen in the month of Aug’16 after which prices fall upto USD 55/MT in the month of Sept’16.
Soaring coking coal prices (HCC) which are currently hovering in the range of USD 251-252/MT, FoB Australia have created a shortage of coal in China thereby, lifting prices for finished products.
Overall, there is increased demand for iron ore in China due to infrastructure building and restocking done by Chinese mills, but currently, supply tightness from Australia and Brazil are supporting iron ore prices, hence global iron ore prices are gearing up.
Chinese spot steel also witnessed gain. Spot billet prices in Tangshan were up RMB 60-80/MT today, current prices were at RMB 2,130/MT (USD 327/MT).While, spot rebar prices in Beijing rose by RMB 30/MT.
The Recent announcement of China’s economic planner that the targeted steel capacity cuts for 2016 are likely to get completed by the end of this month also supported iron ore prices. In addition, the weakening Chinese currency is supporting import cost of iron ore.
Market participants still believe that this price gain will not last for long. With new supplies to start operations and China’s infrastructure building to slow down with coming winter season may pressurize iron ore prices to come down in the near term.
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