Iron ore prices soared to RMB612 per tonne (as on 21st March, 13:30 GST) on Dalian Commodity Exchange (DCE). The prices were 1.24% up as compared to the close on 20th March (13:30 GST). The rise in the prices was not very significant as the market trended quietly before the weekend approaches due to the less participation of the Chinese mills to top up the raw material inventories. The mills were quiet in the wake of uncertainty over the Chinese future government policies over the pollution level in China.
Many mills in Wuan believed that the mills in the provinces would have a chance to resume production by the end of March. In the recent development, the government officials of Tangshan announced that the government would suspend the activity of 126 iron ore beneficiation plants in Qian ‘an of Tangshan city in an effort to control the air pollution. The move by the Chinese government is expected to hamper the production of iron concentrate by 15,000 – 20,000 million tonnes per day.
The suspension of 126 iron ore beneficiation plants during 19th to 31st March is expected to provide an impetus to the iron ore prices.
Although, the prices of iron ore miners on Australian Stock Exchange extended gains for the second session, with BHP Billiton (ASX: BHP) marking a day’s high of A$37.790 before settling slightly below to the previous close of A$37.680. The stock settled down by 0.19% at A$37.610 as compared to its previous close.
However other iron ore miner, Rio Tinto (ASX: RIO) settled at A$94.170, up by 0.72% as compared to its previous close of A$93.500. The stock of the company marked a day’s high of A$94.500 and ended the day session on a positive note.
The Fortescue Metals Limited (ASX: FMG) marked a gain of 1.23% as compared to its previous close. The stock prices rose to mark a high of A$6.740 before ending the day session on a positive note at A$6.590.
The iron ore market has reacted time after time over the supply, and demand dynamics with the major price change revolving around the production from the Brazilian giant Vale. In the recent Status Quo, Vale is surrounded with bans and its Dique mine and Timbopeba mine are currently out of production chain due to the halt in operations.
The suspension of Vale’s operations from its Guaiba Island terminal kept the company in shackle and supported the iron ore prices, as the production loss from the mammoth miner concerned the market participants over the possible supply disruption.
However, in the wake to curb the pollution in line with Euro 6 standards, China marked several suspension of mills and prevented any sharp upside in iron ore prices due expected from the Vale’s production loss.
Iron ore market is currently narrowing over the balanced scenario of supply and demand dynamics. The recent court order which allowed the Vale’s Brucutu Mine to operate again offset the gain from the removal of bans from few mills in China amid betterment in environmental conditions.
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