Spot iron ore prices drove a roller-coster ride in July’15. Prices began with USD 59/MT, CFR China and after lots of ups and downs finally ended at USD 53/MT, CFR China. Also, in the first week of July’15, prices touched a new 10-year low of USD 44.1/MT, CFR China.
Last week of July’15 proved good as prices recovered to one-month high and stood at USD 55.3/MT, CFR China as spot steel prices in China moved up.
Global prices of iron ore are much more volatile now-a-days as China lowered iron ore purchases owing to weaker demand, limited steel production and low trade volumes due to seasonal effects.
According to China Iron and Steel Association (CISA), steel consumption dropped to 4.7% in the period between Jan’15-June’15. Analysts anticipate that it will be hard to see improvement in steel consumption because of lesser construction activity in the upcoming 2-3 months.
Market highlights of the month
1.Iron ore demand in China is still weak due to limited steel production.Lesser buying interest of raw material was seen from ongoing running mills.
2.Overall steel demand was weak in the country as strict anti-pollution measures forced Chinese steel mills to curb production upto 30-50%. In addition to this, some inefficient mills were asked to shut down in order to support the country’s anti-pollution standards. Around 45 Chinese steelmakers have plans for BF maintenance this week.
3.Brazilian Vale, the world largest iron or producer across the globe, initiated a high cost iron ore production cut by 25 MnT, while maintaining its production target of 340 MnT for this year. The cut will be from its high silica ore (low quality products) mines in south and south east Brazil, as there will be an oversupply of the material in the market this year.
4.In-line with Vale, Rio Tinto, world’s second largest iron ore miner, decided to cut iron ore production by 10 MnT for second half of 2015. The company decided to cut production owing to unseasoned weather, including two cyclones in Western Australia which hampered the operations at Pilbara by 7 MnT.
5. BHP Billiton, the Anglo-Australian mining company recorded a production of 233 MnT in Australian FY15 with production increment by 14% Y-o-Y. Company expects to produce 247 MnT this fiscal and aims to achieve the target by growth at Western Australian regions and reduction in cost of production.
6. FMG, the fourth largest miner in the world hits its production target for Australian FY15 (starting 1st July’14 to 30th June’15) and registered a production target of 165.4 MnT. It plans to maintain export at the same level for next financial year 2016.
7. Inventories at major Chinese ports fell marginally, being 82 MnT at the starting of month and 81.3 MnT by the end.
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