Iron Ore Prices In Doldrums Over Improving Steel Inventory And Supply Chain

  • Apr 26, 2019 AEST
  • Team Kalkine
Iron Ore Prices In Doldrums Over Improving Steel Inventory And Supply Chain

Iron ore prices traded mixed in the global market with prices climbing on NYMEX; Iron Ore Fines 62% Fe futures settling at $93.14 (as on 25th April 2019) from the level of $92.95(Day’s close on 24th April 2019).

On the other hand, the prices in China dropped; Dalian Commodity Exchange Iron Ore Fines 62% Fe dropped and closed at RMB 616 (as on 25th April 2019), down by 0.48% as on 25 April 2019 as compared to its previous close. The factor which supported the iron ore prices was the procuring activity of mills in China; however, the procuring spree was challenged when the government of Tangshan announced a level II orange pollution alert to be extended till April 30th.

Along with Tangshan, Handan provinces in China, which is a top steelmaking province in Hebei also extended its orange pollution alert till 30th April. The smog alert by these provinces lidded the procuring activities and halted the gains in the iron ore prices.

On the supply side, the steel inventory in China improved slightly which coupled with the improvement in the iron ore supply chain exerted pressure on iron ore prices in China.

As per the data, the steel rebar inventories across the social warehouses stood at 6.62 million metric tonnes, down by just 4.9% (as on 25th April), as compared to the fall of 7.8% a week ago.

The combined social and steel mills inventory declined by just 4.4% and stood at 8.55 million metric tonnes (as on 25th April), as compared to a decline of 6.6% a week ago.

The inventories of hot-rolled coil (HRC) snapped three consecutive weeks of declines and stood at 902,200 metric tonnes (as on 25th April), up by 1.76% as compared to a week ago.

The increase in steel inventory was mainly due to the high production of steel by the Chinese mills to take advantage of high steel prices in China. The mills in China were expected to increase their production in April, which initially contributed to the rise in iron ore prices.

Mills in China are still procuring to increase the steel production. Investors may keep a close watch if this eventually leads to a fall in steel prices in May, which in turn, coupled with an improvement in the supply chain of iron ore, can possibly exert pressure on iron ore prices in the coming months.

The Australian Miners reacted sharply over the building supply chain in the global market and recovering steel inventory in China and marked a significant fall in prices on the Australian Stock Exchange (ASX).

Mammoth iron ore miners such as BHP Billiton (ASX: BHP) and Fortescue Metals (ASX: FMG) dropped significantly today on ASX.

The share prices of BHP Billiton dropped; after starting the day session at A$37.97 the share prices plunged till A$37.465, before closing the day at A$37.600, down by 1.571% as compared to its previous close. The fall marked a fifth consecutive fall in the share prices.

Another significant miner, Fortescue Metals, followed the same trajectory and fell to mark the day’s low at A$7.130, after starting the day session at A$7.410. The share prices closed today at A$7.190, down by 5.395% as compared to its previous close. The fall marked a second consecutive fall in the share prices.


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