Iron ore price for Fe 62% fines have witnessed an increase since mid of last week. Benchmark index is assessed at USD 67.55/MT CFR, China today (23rd Apr’18). It closed at USD 66.85/MT CFR, China last week on Friday 20th Apr’17. The uptick is the outcome of rising prices in both futures and domestic steel market.However buyers are cautious about booking seaborne cargo and are preferring to buy port stocks.
Reasons behind hike in iron ore prices in China-
1. Falling iron ore stocks at Chinese major ports – The port stocks witnessed a fall from record high inventory at 161.68 MnT towards the end of Mar’18 to 160.1 MnT as on 13th Apr’18 and 159.78 MnT as on 20th Apr’18.
2. Chinese govt slashed cash reserve ratios – The increase in iron ore market prices is also attributed to reduction in cash banks hold as reserves, announced by Chinese Central banks, leveraging benefits to lenders.This brought cheer to Chinese steel mills.
3. Hike in futures – Chinese steel futures climbed to highest since last 5-weeks today. Hike in futures also supported price hike in physical market.
4.Pick up in construction activities – The growth in the construction activities is supporting the raw material market. There is expected increase in iron ore market, as evident from declining iron ore inventories. The month of April and May is marked by extreme construction activities in China, further rendering an increasing expectation in the market.
5. Increase in steel prices – Prices of HRC in the domestic market are gauged at RMB 4,060-4,090/MT in Eastern China today against RMB 3,930-3,980/MT (ex-works) a week ago.
Rebar inventories in China fell 6.6% W-o-W to 7.69 MnT last week signalling increased steel demand for construction activities.
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