The seaborne iron ore prices are witnessed at around USD 67/MT, CFR China on 07 Nov’16. Global iron ore prices have hit 6-month high.
Prices moved up sharply by USD 2-3/MT in a daytime mainly due to robust coking coal and coke prices as well as restrictions imposed by Chinese government upon production and transportation in Tangshan city.
Factors behind increase in global iron ore prices are:
Rising coking coal prices lifted iron ore prices: The continuous strengthening in coking coal and coke prices which touched to the level of USD 284/MT, FoB Australia have made steel prices to move up further. Thus, as a result, it has impacted iron ore prices also to move up sharply.
Chinese buyers prefer high-grade iron ore to reduce coal consumption: The increasing appetite for high-grade iron ore in the Chinese market have made spot iron ore prices to move up sharply to over 6 months high.
Chinese steel mills now prefer high-grade iron ore mainly from Australia and Brazil to boost productivity and consume less coal as there is a shortage of coal in China which has kept prices of coal at higher side. Thus, iron ore prices lifted up.
China’s ferrous market upsurge on production and transportation restrictions: Chinese ferrous market moved up on the ground of restriction imposed by the Chinese government on production and transportation in Tangshan in order to reduce environmental pollution.
In line to this, Chinese billet prices moved up by RMB 40/MT and currently witnessed at RMB 2,450/MT (USD 362/MT). On similar lines, Chinese billet export offers also moved up sharply. Spot rebar offers also rose by USD 22-30/MT in the eastern and northern region of China.
Chinese hot rolled coil export offers also moved up by USD 30- 35/MT and currently witnessed at USD 440-445/MT, FoB China due to increase in prices in domestic market (which is majorly due to rise in coking coal prices and production costs).
Iron ore buying increased by Chinese mills before onset of winter season: Due to the high demand for iron ore from constructional and infrastructure sector, there is a healthy level of steel production by Chinese mills.
Trade activities have also increased as mills are interested in restocking the material before onset of winter season when usually construction activity slows down. So, increasing trade activities are supporting iron ore prices to move up further.
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