In June’16, global iron ore prices remained stable at USD 51-52/MT, CFR China. However, by the end of June’16, prices moved up and touched to a level of USD 54/MT, CFR China by the end of the month.
Market drivers of the month
1. Starting off the month, global iron ore prices are assessed at USD 50-51/MT, CFR China. There was a short-term revival in prices on account of Dragon Boat festival Holidays.
2. China’s top steel producing city Tangshan also announced production cut between 14 June’16 to 21 June’16 in order to improve air quality. Construction activity in China also slows down between June-August creating slack steel demand.
3.Iron ore prices waved up upon strong steel fundamentals. As the production ban imposed on Tangshan lifted, spot steel prices moved up sharply supporting iron ore prices to moved up.
4.Alongside, the tie-up between China’s second largest steel producer Baosteel and Wuhan Iron and Steel Group (WISCO), China’s 4th largest steel producer to restructure their business, have made positive sentiments in the market. Billet, rebar, and HRC prices moved up due to this tie up.
5. Throughout the month, there was short-term demand created in the market as steel mills had actively started restocking raw material mostly from the port stock cargoes.
6. Chinese domestic billet offers in a month time, have increased by RMB 270/MT (USD 41.5/MT) due to low inventories and increased demand. Current prices for 150 * 150 domestic billet are hovering at RMB 2,100 /MT (USD 323/MT), Ex-Tangshan.
7. Chinese billet export offers have also increased in-line with domestic offers by RMB 10/MT (USD 1.5/MT) due to rising domestic prices. Current export offers are hovering in the range of USD 310-315/MT, FoB China.
8.Indian iron ore fines Fe 57/58% offers also moved up by USD 4/MT, FoB East Coast in a month time. Current export offers for Fe 57/58% fines are hovering in the range of USD 30-32/MT, FoB East Coast. In addition, Odisha-based major miners turn active in the export market.
9.Chinese domestic rebar prices (Shanghai rebar) also moved up by RMB 100/MT. Current domestic offers for rebar are hovering at RMB 2,100/MT (USD 323/MT). On similar lines, rebar export offers are hovering at USD 300/MT, FoB China.
10.Stockpiles at major Chinese ports had reached to a level of 101 MnT as on 01 Jul’16.
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