Tuesday, March 22,
Supply of Iron ore seems to be scarce as markets begin to realize the huge scale of reconstruction required in quake-hit Japan..* But spot iron ore prices in China are dropping as demand shrinks on tightening moves Chinese Government.
According to Analysts, There is a large reconstruction ahead in Japan, the magnitude of which is only just being realized. Demand for iron ore and steel is expected to rebound when Japan starts rebuilding everything from homes to power plants and Japan’s steel capacity, at more than 130 million tonnes, can support the reconstruction.
Iron ore prices may continue to fall over the next two to three months, before a demand-driven rebound happens around the end of the second quarter.
Spot prices of iron ore delivered to China have already fallen since mid-February to $170/MT, the lowest since late November. Indications of a softening contract price have mainly sparked as the spot prices are below the December quarter price of $178.
But for the long term, given the prospect of a massive rehabilitation in Japan, prices could pick up. Chinese mills might go for restocking in response to a recovery in demand and prices might jump back towards $200/MT.
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