Global iron ore prices are assessed at USD 57/MT, CFR China as on 14 Oct’16. Prices moved up by USD 3/MT after Chinese buyers returned from a week long holidays.
Prices moved up as Chinese steel mills have started restocking raw material.
Chinese ferrous market regains strength as a result of which iron ore traders increased their offers. However, buyers were reluctant to accept higher prices.
This rise in iron ore prices does not seem to well ground as it was only because of restocking but as soon as restocking finishes off, iron ore prices are likely to come down.
In China, demand for high-grade iron ore is high due to coke shortage as well as rising transportation costs. By the end of the Indian monsoon, it is expected that low-grade iron ore exports from India will likely to increase in China, thereby creating pressure on prices.
According to few market sources, Indian sellers will need to provide a nearly discount of 15-20% in order to generate buying as Chinese buyers are more interested in buying high-grade ore.
Iron ore prices likely to succumb once the winter season starts and restocking period ends, beyond that, the new entrants will create more pressure on prices. It is anticipated that Australia and Brazil will add around 200 MnT iron ore boosting the global glut and hurting prices, which will force Chinese miners to cut output in China.
Although Chinese steel makers have ramped up steel production, the sudden upsurge in coking coal prices is eating up steel margins. Today, Chinese billet (Q235) prices dropped down by RMB 20/MT and were assessed at RMB 2,200/MT (USD 338/MT). However, Shanghai rebar prices stood at RMB 2,350/MT (USD 361/MT).
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