Iron ore prices traded flat and on a mixed note over different international exchanges.
Iron ore fines 62% Fe (CME) traded slightly higher to settle at $93.97 (Day close on 15th April), marginally up by 0.19% as compared to its previous close of $93.79 (as on 14th April). On the other hand, prices remained stagnant in China. The Dalian Commodity Exchange (DCE) Iron ore fines 62% Fe closed at RMB 653.00 (as on 15th April), which was slightly down by 0.23%, as compared to its previous close.
Steel Inventory in China declined to 15.50 million tonnes (as on 12th April), down by 7.15% as compared to the inventory of the previous week. The decline in inventory also marked a decline in the inventory of hot-rolled coil (HRC) steel and long steel such as rebar.
The fall in steel inventory across China’s both social and mills inventory, previously prompted the mills to procure high iron ore to replenish the steel inventories across China, due to its high demand in the domestic market.
The mills earlier ramped up the production of steel in China to take advantage of high steel prices in the domestic market and coupled with the supply disruption caused by the production loss from significant miners such as the Brazilian giant Vale and Australian mammoths Rio Tinto and BHP, propelled the iron ore prices previously.
However, the supply gap is now shrinking and the deliveries from Australian ports to Chinese ports are picking up slowly, as compared to the less shipments in the early April. Albeit, the demand in China’s domestic market remains high amid improvement in the domestic economic condition and rapid expansion in the manufacturing sector.
As per the data, the manufacturing activities in China rose in March 2019, which was marked by the improvement in China Manufacturing PMI and Caixin Manufacturing PMI. Both the indices, which gauges the economic expansion rose above the mean value of 50.0 in March. The expansion in China’s economy propelled the high steel demand, which in a loop, propelled the demand for steel making raw material such as iron ore and coking coal.
In the recent event, the on-going trade talks between the two significant economies of the globe, i.e., the United States and China, marked its first positive signs, when the trade balance of China finally improved and Money supply in the domestic economy surged.
The improvement in the economic condition amid betterment in trade, is expected by the market participants to further raise the steel demand in China’s domestic market and mills are expected to ramp up the production to a record level in April.
The more steel China will consume, the more it will support the iron ore prices; however, the market participants are also focussing on the supply scenario to gauge further the direction of iron ore market and its prices, which is now almost near $94. The shipments from Australia is now improving; however, Cyclone Wallace is still developing in the Pilbara region, which is expected to cause severe damage in the region.
The market participants will be eyeing on the supply and demand dynamics to decide the future direction of the raw material market.
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