In May’16, global iron ore prices witnessed a downturn. Global iron ore prices hit 3 -months low in May’16.
Starting from the month, global iron ore prices were at around USD 65/MT, CFR China on 02 May’16 and finally touched to a level of USD 50/MT, CFR China on 31th May’16.
Market drivers of the month
1.In a month time, prices were down by USD 15/MT. Prices dropped down due to weakening spot billet prices and rising iron ore inventories throughout May’16.
2.In Apr’16, iron ore prices touched to a level of around USD 69/MT due to speculative trading. But after reaching at USD 69/MT a month ago, prices have started retreating as the government imposed a restriction on speculative trading.
3. Chinese domestic billet offers in a month’s time, have plunged down by RMB 610/MT (USD 94/MT) from RMB 2,390/MT (USD 368/MT) to the current level of RMB 1,780/MT (USD 274/MT).
4.Chinese billet export offers also dipped by USD 90/MT from USD 390/MT, FoB China.
5.Indian iron ore export offers for Fe 57% fines were assessed at USD 28-29/MT, FoB India. Prices are down by USD 14/MT M-o-M. Nowadays, Indian iron ore exporters exploring opportunities to sell Indian iron ore at “Cash and Carry” basis at Chinese Port with a discount of 14 % against Platts index.
6. Chinese domestic rebar offers fall by up to 1,000 RMB/MT (USD 153/MT) and Chinese rebar export offers also fall by around USD 80/MT in a month time.
7. Steel demand in China was lackluster which had hit buying interest of steel makers. Some steel producers have tried to lower their steel prices so as to attract buying, but even so it is still difficult to stimulate downstream demand.
8.Chinese steel mills with sufficient raw material stockpiled cut down its procurement in May’16 while those with low inventory levels are stepping up their purchases amid low prices.
9. China‘s crude iron ore production up by 6% in Apr’16. Production remained at 102.6 MnT in Apr’16.
10. Stockpiles at major Chinese ports have climbed above 100 MnT in May’16, such levels last seen in Dec’14.
11. In May’16, iron ore imports are likely to strengthen as there will be an increase in supply from Australia, due to its financial year ending. It is estimated that imports will remain at the level of 84 MnT in May’16.
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