Thursday, July 14,
Spot iron ore in China extended gains and offers remain firm as traders continue to build inventories.
Fe 63.5/63 of Indian cargo is heard being quoted at $181-183/MT. Whereas, Australian 62-grade Newman iron ore fines is quoted at $178-$180/MT, up from $177-$179 on Wednesday.
Higher steel prices are encouraging traders to restock iron ore, with Shanghai rebar futures holding up the level near a high last reached in early May. Also, tight supplies from India are also supporting the rise in iron ore prices.
According to traders, “I think the buying interest will be there so long as steel prices remain high. Once steel prices drop again, this upward momentum would quickly fizzle out”.
China aims to build 10 million low-cost housing units this year and analysts suggest that could sustain demand for long steel products like rebar, with only 30 percent of the project believed to have been started in the first half of the year.
“Some of the Chinese steel mills are coming back and looking to replenish inventories which are running relatively low. But the rise in prices could be short-lived as not all of the steel mills seem to be coming back into the market to purchase and the number of physical transactions appears to be relatively low.” said Danny Thompson, iron ore swaps broker at Freight Investor Services (FIS).
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