Iron Ore Prices Stalled The Rally, Albeit High Production Expectation In April Prevented Any Sharp Fall

Iron ore prices stalled after a steep rise caused by supply disruption. The benchmark Iron ore fines (CME) 62% Fe futures (Tioc1) slipped from the level of $93.63 (Day’s high on 8th April 2019) to the level of $92.72 (Day’s low on 9th April).

The factor which exerted the pressure on iron ore prices was the drop in daily crude steel output. As per the data, the daily crude steel output in China dropped by 3.56% during March 21-31. China Iron and Steel Association (CISA) member mills averaged 1.83 million metric tonnes during the last 10 days in March, which was down by 67.7k metric tonnes as compared to the crude steel output from 11th to 20th March.

The reduced output in China’s domestic market was majorly due to the ban on few mills, which in turn, marked a decline in the procurement of the raw-material and exerted slight pressure on the iron ore prices.

However, the expectation of high production in April provided a cushion to the iron ore prices and prevented any sharp decline in it. The production of hot-rolled coil across major steelmakers in China is expected to ramp up by the market participants amid easing in production curbs post the heating season in China.

As per the data, the significant steelmakers in China plans to produce 8.17 million metric tonnes of hot-rolled coil in April, up by 4% as compared to the realised output in March. The data also suggests that the steel produced is expected to get consumed in China’s domestic market, and as per the data, about 603,000 metric tonnes is expected to export, down by 12.3% as compared to March, and 7.57 million metric tonnes is expected to get utilized in the domestic market, up by 5.4% as compared to consumption in March.

Not just the hot-rolled coil, the steel rebar output is also expected to surge in April across 33 significant producers of long steel in China. As per the data, the rebar output is expected to increase by 0.99% to stand at 7.71 million metric tonnes in April, as compared to the actual output in March

The steelmakers in the northern provinces are expected to produce 1.45 million metric tonnes of long steel in April, up by 6.87% as compared to the actual output in March.

Tangshan Iron & Steel in Hebei provinces in China reached the normal level of output after resuming the operations from temporary suspension exerted on it amid poor air quality in the top steelmaking provinces Hebei in China.

The expectation of high production after a decline in March prevented any sharp fall in iron ore prices. To gauge the direction of the price ahead, the market participants are eyeing on the demand and supply dynamics, where demand is overcoming supply, which marked a decline amid production cut from significant iron ore miners such as Rio Tinto (ASX: RIO) in Australia.

The high price scenario is supporting the prices of the company along with other factors.

The share of the company rose to mark the day’s high of A$102.1, before ending the day session on a positive note at 101.83, up 0.25% as compared to its previous close.


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