Global iron ore prices were witnessed at USD 50.8/MT, CFR China on 27 Oct’15. Despite prices have hit 3-month low levels, they are heading towards further decline. Today, spot billet prices were down by RMB 10/MT and prices for Shanghai rebar were recorded low at USD 287/MT.
Chinese steel producers are further looking to curb steel production owing to slow demand. Chinese mills are bearish owing to weak steel demand. Moreover, it is expected that the similar situation will continue this year with more production cut in near terms. This will definitely pressurize iron ore ore prices.
Chinese steelmakers have shown limited buying interest. As a result, iron ore inventories at major ports are increasing continuously. Iron ore stock at ports was recorded at 84.9 MnT (as on 23 Oct’15) – the highest level since Jun’15.
Meanwhile, iron ore shipments from world’s top producers like Australia and Brazil are rising persistently due to increased production. Apparently, Chinese steel production on the similar lines are falling continuously.
Reduction in interest rates by Chinese government
Chinese government is also taking initiatives to recover its slower economy. Last week, People’s Bank of China reduced interest rates to fight against slow economy and deflationary pressures. Although, the measure was taken to boost demand in China and support deflationary economy, no improvement has been seen till now.
In-viability of steel exports from China
In-viability of steel exports from China would be another reason that prices may not surge in coming days. Recently, Indian government has imposed anti dumping duty on steel imports from three nations namely China, Malaysia and Korea for 5 years. The step was taken to protect domestic producers from below-cost inbound shipments. Alongside, India imposed duty of USD 309/MT on imports of certain steel products from China.
Leave a Reply