Iron Ore Prices Stagnant In International Market; Prices Soared In China Ahead Of May Holidays

Iron Ore Prices Stagnant In International Market; Prices Soared In China Ahead Of May Holidays

Iron ore prices rose in China as May holiday session approaches; while the prices remained stagnant in the international market. The international iron ore price benchmark, Iron Ore Fines 62% Fe futures (CME) closed at $93.17 (as on 29th April 2019), up by just $0.01, as compared to its previous close of $93.16.

The prices of iron ore across China soared by RMB 15.50; the Iron ore fines 62% Fe on the Dalian Commodity Exchange (DCE) closed at RMB 634 (as on 29th April), up by 2.51% as compared to its previous close.

In the current event, the supply and demand dynamics of the iron ore favoured the prices, as demand once again rose in China and the supply still loomed across the Chinese ports. As per the inventory data, the Iron Ore Inventory across the 35 ports in China, declined by 3.23 million tonnes. The iron ore inventory across these main 35 Chinese ports stood at 125.46 million tonnes (for the week ended 26th April), down by 2.51% as compared the inventory reported by the port authorities previously.

The sudden decline in iron ore inventory prompted the mills to procure more iron ore ahead of the May holidays in China. The demand for iron ore came from these mills in line of a fall in Steel Inventory in China. As per the data, China steel inventory plunged by 0.74 million tonnes and stood at 13.82 million tonnes (as on 26th April 2019), down by 5.05% as compared to the previously reported inventory.

A decline in steel inventory ahead of the holiday session, supported the steel prices in China and the prices rose. As per the data, the prices of Steel Rebar (long-steel) stood at RMB 4130 per tonnes (for the week ended 26th April), up by 0.73% as compared to its previous prices.

However, the prices of hot-rolled coil (HRC) steel remained unchanged and stood at RMB 3980 per tonnes (as on 26th April). In a loop, a rise in steel prices before the holiday session prompted the Chinese mills to take advantage of high steel prices in China. The impetus gained by these mills surged the demand for iron ore in China, and the prices rose.

However, the international iron ore price benchmark is still stagnant with the market participants in the international market trying to picture and figure out the demand and supply dynamics of the iron ore market.

Market players are very well aware that the supply chain is gaining strength in the market. The Australian ports such as Port Hedland are now operational, and the shipments from the port resumed in the previous week.

To reckon the direction of the commodity further, market participants may keep a hawk-eye on the manufacturing activities in China, which is expected to decline, as per the market consensus. Apart from a decline in manufacturing activities in China, the market speculators and investors of the commodity will track the consumer sector, which as per the market expectation is estimated to increase ahead in China.


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