Global iron ore prices remained on upward trend in Aug’16 . Starting of the month, prices touched to a level of USD 62/MT, hit the highest in 3 months and continued to remain stable at such levels. However, by the end of Aug’16, prices moved down to USD 59/MT.
Steel mills were compelled to cut production by 50% due to the G20 summit held between 31 Aug’16-04 Sept’16 in China.This resulted in limited demand of steel in South China. Thereby, making iron ore prices to remain stable at the higher end.
Market drivers of the month
1. Iron ore prices were up as Chinese steel strengthens. Stronger margins among Chinese steel producers have increased appetite for raw material which lifted iron ore prices up to USD 62/MT.
2. Chinese domestic billet offers have gained USD 24/MT in a month time. Prices of domestic billet were witnessed at USD 345/MT as on 31 Aug’16.
3. Chinese billet export offers for 150*150 mm are currently hovering at USD355/MT, FoB China, up by USD 30/MT in a month time.
4. Chinese rebar domestic offers/ spot rebar prices for HRB 400 grade (25 mm) in Beijing moved up by USD 15/MT within a month and stood at USD 368/MT. The same grade material, available in Shanghai at USD 360/MT, moved up by USD 10/MT for the same duration.
5. Chinese rebar export offers are currently hovering at USD 360/MT, FoB China up by USD 22/MT in a month time.
6. Indian iron ore fines offer for Fe 57/58% low-grade iron ore are hovering in the USD 34-36/MT, FoB India. Indian east coast based iron ore exporters namely Rungta Mines, Essel Mining and few more exporters have started moving decent quantities of low-grade iron ore to ports.
7. China’s iron ore imports in the month of Jul’16 hit the highest at 88.4 MnT till now in 2016 . Iron ore imports rose by 8.3% M-o-M and 2.7% Y-o-Y.
8. China, the world’s largest iron ore consumer, produced around 115 MnT ROM (run-of-mine) in Jul’16. Crude ore production was down by 4% M-o-M.
9. Stockpiles at major Chinese ports are at 105.4 MnT as on 02 Sept’16.
10. Iron ore demand in China is likely to drive down as Chinese steel production may fall by the end of this year. There are continuous series of events and environmental inspections in China, which will keep steel mills away from producing steel, hence driving down iron ore demand too.
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