Steel Price Jolt Dragged Iron Ore Down In The International Market

Iron on prices nose-dived in the international marked amid fall in steel prices. The CME Iron Ore Fines 62% Fe closed at US$93.88 (14th May 2019), down by approx. 0.53% as compared to its previous close of US$94.38.

The prices ended the day’s session at RMB 644.50 (as on 14th may) on the Dalian Commodity Exchange (DCE), down by 1.38% as compared to its previous close.

Decline in steel prices in the domestic market of China, despite lower steel inventory was one major factor which exerted pressure on iron ore prices. The prices of steel rebar settled at RMB 4100 a tonne (as on 10th May 2019), down by 0.73% as compared to its previous close.

The steel rebar prices dropped on the Shanghai Future Exchange (SHFE) most active October contract (RB1910) as well and closed at RMB 3663 a tonne (as on 14th May 2019), down by 0.76% as compared to its previous close.

Besides, steel inventory across China dropped substantially, and stood at 13.52 million tonnes (as on 10th May 2019), down by 2.18% as compared to its previous level. However, the drop in steel prices coupled with looming global economic conditions prevented any sharp gain in iron ore prices, which was expected by the market participants over the supply drop.

The prices inched up slightly today and are currently at US$93.94 (as on 15th May 2019 UTC-4 01:28:06).

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As per market estimates, the current scenario of drop in steel inventory coupled with a decline in the iron ore inventory in China may boost the iron ore prices provided the demand of steel is not hampered from the tariff increase by both the United States and China.

The iron ore shipment across the Chinese ports marked a decline; as per the data 82 vessels carrying 12.33 million metric tonnes of iron ore arrived at the Chinese ports for the week ended 11th May, which in turn, marked a decline of 1.66 million metric tonnes in shipment, as compared to the previous arrival.

The arrivals from the Australian and Brazilian port also marked a decline, and as per the data, the shipment departing from the Australian port declined by 1.47 million metric tonnes and stood at 15.08 million metric tonnes (for the week ended on 11th May 2019).

The shipment from Brazilian ports dropped by 1.14 million metric tonnes and stood at 5.18 million metric tonnes for the same week.

In a nutshell, the iron ore and steel inventory across China marked a decline; however, the decline in steel prices exerted pressure on iron ore prices. The fall in steel inventory could prompt the mills in China to increase the production; however, the mills’ decision related to the production level would depend upon the global steel outlook and on the U.S-China trade war.


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