Global iron ore prices has come to the level of USD 75/MT, CFR China on 29 Nov’16. Prices moved down sharply by USD 5/MT in a day as Chinese ferrous future market drop down.
A reduction in China’s steel capacity along with a push to spend more on infrastructure has spiked steel prices this year. In addition, speculative trading also supported spot iron ore and steel prices to move up sharply.
But, in a move to reduce speculative trading government was taking measures to restrict the limit of trading in a day. In addition, the Shanghai Exchange has also limited the lot size taken by non-members in rebar futures to 8,000 lots from 10,000 lots.
Stable coking coal prices has relaxed Chinese mills as they no longer have to use high grade iron ore what they did in the past 2-3 weeks. In addition, weakening coking coal prices is also weighing on iron ore prices to move down further.
In addition, as iron ore prices moved down, traders and buyers resisted themselves from buying ore and was in wait-and watch situation to see the market moves. This has led to reduce trading activities today.
Market participants believed that the steel production cut is going to hit demand for iron ore in the coming time but currently traders and buyers are engaged in purchasing iron ore cargoes to produce more steel before production cut starts.
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