Global iron ore prices have witnessed a sudden increase of USD 2.6/MT post week-long Chinese holidays. Prices are assessed at USD 46.1/MT, CFR China on 16 Feb’16.
Iron ore prices jumps three months high since Nov’15, as Chinese mills went for restocking of the raw material following Lunar New Year. But, apparently, this gain is temporary as major iron ore producers continuously flowing cheap iron ore output to China.
Just before Chinese holidays, prices inched up to USD 44.7/MT, CFR China, an increase of USD 2/MT as active buying interest was seen by Chinese mills.
A recent report by China customs showed, Chinese iron ore imports and steel exports shrank in January. China imported 82.1 MnT iron ore, on the other hand exported 9.74 MnT steel. Steel exports were less due to imposition of foreign anti-dumping duties on Chinese products by many countries.
Lesser iron ore imports by China may also have been due to lesser supply from Australia’s Port Hedland as operations were disrupted there in Jan’16 due to cyclone. Port Hedland is largest bulk terminal in world.
Meanwhile, there is great need to reduce the current overcapacity problem in China. Chinese govt. has also announced a steel production cut of 100-150 MnT pa in 2016. In addition, in the coming term, either they will instruct banks to tighten there loans to mills or they will impose more strict environmental regulations inorder to protect their steel industry. This will exert more pressure on the iron ore market and iron ore prices will fall further.
Trade-wise:
- Rio Tinto sold 170,000 MT Fe 61% Pilbara blend fines at USD 45.8/MT, CFR China via tender.
- Vale sold 114,749 MT Fe 65.3% Carajas iron ore at USD 48.8/MT, CFR via a tender.
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