Iron Ore Prices Remain Stagnant; China On Labour Holidays

  • May 03, 2019 AEST
  • Team Kalkine
Iron Ore Prices Remain Stagnant; China On Labour Holidays

Iron ore prices remained flat amid China holidays; prices previously inched up slightly.

China is the world’s largest steelmaking country, and it majorly fulfils the global steel demand. Due to its status of the world’s top steelmaker, it is also the world’s top iron ore importer, which in turn, makes the movement of iron ore in China a valuable factor in driving prices globally.

In the recent event, China entered labour day holidays, which in turn, is marking a stagnant movement in steelmaking raw material prices such as iron ore. The iron ore prices rose significantly previously amid high domestic China’s demand and high supply constraint in Australia, which is the world’s top supplier of the commodity.

However, in the recent event, the iron ore supply from Australia is picking up again, and the miners have lost significant market value despite high iron ore prices. Some market analysts believe that the decrease in the share prices of Australian miners is due to the fact, that the investors are discounting the effect of iron ore future demand, which as per them is estimated to decline once the steel inventory in China builds up. On the other hand, the supply is estimated to pick up as Vale entered the supply chain again.

Australian miners such as Rio Tinto, BHP have lost noticeable market value over the past few trading sessions.

Rio Tinto (ASX: RIO) prices dropped from its 52-week high of A$102.830 (16 April 2019) to the present level of A$94.430 in three weeks (including current weak). The decline from 52 weeks high to the current level is approx. 8%; the rate of return over last one month is -4.04% and the rate of return over the past 5-days is -3.25%.

BHP Billiton (ASX: BHP) prices also fell from its 52-week high of A$40.130 (achieved on 9 April 2019) to the current level of A$36.940 in four weeks (including current weak). The decline from 52 weeks high to the current level is approx. 8%; the rate of return over last one month is -5.155 and the rate of return over the past 5-days is -1.54%.

Some market analysts are presenting an entirely different picture in the market; they believe that global steel demand will pull up the strings of iron ore prices, and the high steel demand forecast by the world steel association is in line with the effect of positive trade-talks.

The iron ore market is currently stagnant, and the further trend in prices will get clear once the holidays in China end and steel making mills’ activities recommence. The steel mills in China procured and restocked the required iron ore before the holidays. If the steel inventory for the week ending today remains low, the iron ore market could see an upside amid a continuation of the procurement process by Chinese steel mills and vice versa.

However, the market participants will be eyeing on the supply side as well and on the iron ore inventory in China for the week ending today.


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