Iron ore prices were slightly up, with Dalian Commodity Exchange (DCE) Iron Ore 62% Fines grade closed at RMB 614 (as on 27th March 2019), up by 0.82% as compared to its previous close. The slight gain in the prices was mainly driven by the weekly procurement of the Chinese mills amid high steel prices in the domestic market.
As per the latest data available, the steel rebar prices marked a closing of RMB 3950 (on 22nd March), and the steel hot-coiled rod (HRC) marked a closing of RMB 3880 (on 22nd March).
Chinese domestic mills procured iron as the ban on mills across China, on account of raising environmental pollution, reaches the market expected deadline of April. The domestic mills are expecting the operational activities to resume and are thereby positioning themselves to take advantage of high steel prices in the market.
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The global economy also started showing some respite sign with the U.S. Housing price index rising to 0.6% for January 2019 against the market expectation of 0.4%, which in turn supported the iron ore prices slightly; however, the decline in the U.S. Building Permits prevented any sharp gain in the raw-material prices.
China’s increased stance to curb the pollution level sparked another fall in the low-grade iron ore prices, with Iron port stock of 58% Fe fines declining and closing at RMB 575 (as on 27th March), down by 1.71% as compared to its previous close.
In the recent development, the cyclone Veronica passed through the Pilbara region and the significant iron ore producers such as Rio Tinto and BHP could now resume the operations; however, the Port Hedland is still not operating, as the local port authorities suspended the port loading due to the high tide in river Turner amid regional rainfall during the cyclone.
The temporary suspension of port activities can hold the delivery of iron ore of Rio and BHP from the port, which in turn could possible push the commodity prices in coming weeks before the port activities resume slightly. But the delivery arrival across various ports in China might offset any gains caused by the supply disruption.
On the demand front, the domestic mills in China are eyeing on government actions to lift the suspension on sintering mills across China. In the expectation of that the government in China might lift the ban in April, mills are procuring the iron ore, Albeit, fewer mills are procuring which in turn keeping the prices at bay and slightly bullish.
To reckon the direction of Iron ore prices further, the market participants are eyeing on developments in global economic conditions along with the on-going trade talks between U.S-China over the bilateral disagreement and the delegation of both the countries are expected to meet in Beijing this week.
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