Iron Ore Prices Halted After A Steep Rise; BHP Moving Upwards Despite Stagnancy In Iron Ore

Iron ore prices halted its up-rally with benchmark Iron ore Fines 62% Fe (CME) slightly dropped below its recent high of $92.53 (Day’s High on 3rd April 2019) to the level of $91.81 (Close on 4th April). However, prices remained above $90 mark.

The Dalian Commodity Exchange (DCE) iron ore 62% Fe closed at RMB 687.50 (as on 4th April) slightly down as compared to its previous close.

The Iron ore Fines 62% Fe (CME) prices previously rose above the $90 level over the supply disruption caused by the Cyclone Veronica in the Pilbara Region and high tides in river Turner in Port Hedland.

 The Chinese domestic Iron Ore Inventory across 35 ports rose slightly to 137.30 million tonnes (for the week ended 4th April), up by just 1.55 million as compared to its previous level.

However, the inventory is expected to decline by the market participants as delivery from the Australian ports is expected to go down as another Cyclone Wallace is expected to hit the Pilbara Region again.

As per the data from the Pilbara Port Authority, the delivery of iron ore from Port Hedland to China declined to around 30.68 million metric tonnes in March 2019, which marked a decline by 12.3% as compared to March 2018.

As per the port data, the iron ore delivery from the port stood at 36.39 million metric tonnes in March 2019, down by 7% as compared to previous month and down by 13.5% from a year earlier.

The decline in delivery is supporting the iron ore prices in the international market.

However, on the demand side, the Chinese steel market is marking a correction and steel prices are falling slightly, which in turn is prompted domestic mills to procure less raw material. The less iron ore procurement by the Chinese mills is keeping the lid on iron ore prices despite a shortfall in inventory and production loss from miners such as Rio Tinto and BHP Billiton.

The steel inventory in China also grew by 5.50% and reported at 18.69 million tonnes for the week ended 29th March 2019, which in turn also exerted pressure on iron ore prices. The rise in steel inventory marked a decline in steel prices, the steel HRC prices dropped by 0.77% and closed at RMB 3850 (as on 29th March), and steel Rebar prices fell to RMB 3900, down by 1.27% (as on 29th March).

The fall in steel prices led the steel mills to procure less iron ore; which, in turn, capped the gains in iron ore prices.

BHP price action:

The share prices of the company moved in an uptrend despite the stagnancy in iron ore prices, the prices rose to mark a high of A$39.890 (as on 8th April 2019) and ended the day session at the day’s high at A$39.890, up by 1.71% as compared to its previous close.

BHP on Chart:

Source: Thomson Reuters: BHP Daily Chart

 

Following the development on the daily chart, it can be seen that the share prices of the company are moving above the trio of (7,20,200) days exponential moving average. The share prices are moving in a continuous uptrend. The 14-day Relative Strength Index is valued at 68.218, well above its mean of 50.


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