Spot iron ore prices remained almost stable throughout the month. Prices began with USD 55/MT, CFR China and finally ended today at USD 55.7/MT, CFR China.
Highlights of the Month
1. Starting Aug’15, prices rebounded 28% against the new July’15 10-year low of USD 44.1/MT and reached USD 55/MT, CFR China. Last month, Chinese mills restocked sufficient raw material and produced more steel before the government announced production cut between 20 Aug’15 -03 Sept’15.
2. In the first half of Aug’15, iron ore demand in steel mills rose as they increased inventories before production cut, which strengthened spot iron ore prices. On the other hand, mills located in northern provinces were asked to use pellet or lump over sinter as their raw material in order to reduce environmental pollution.
3. Rio Tinto plans to open its Silvergrass iron ore project in 2016. This project has been put off three times in the past two years. However, the company expects that Silvergrass project will lift its export figures to 360 MnT instead of 350 MnT in 2016.
4. On 12 Aug’15, a massive explosion at Tianjin Port hampered many of the iron ore import shipments in China. The explosion hit the movement of cargoes and caused shipping delays, which temporarily lifted spot iron ore prices to USD 56/MT, CFR China. However, immediate impact on steel mills was not seen as they had sufficient inventories to support a week’s production.
5. Meanwhile, Rio Tinto also planned to increase export shipments to China. It plans to ship 240 MnT in 2015 against 200 MnT in 2014. This has created a wide gap between iron ore supply and demand in China which will totally impact iron ore prices which may fall further.
6. Shanghai rebar also hit an all-time low last month at USD 304.5/MT. Major reason was slow Chinese economic growth and lesser steel production.
7. In addition to this, devaluated Chinese currency Yuan by 4.4% made imports more costlier for China. The country majorly imports from Australian miners. In 2015, China imported highest amount of iron ore in July i.e. 86.1 MnT.
8. Prices of spot billet in China also collapsed by RMB 80/MT during last month.
Source: SteelMint Research
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