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Iron ore prices rose once with benchmark Iron ore fines 62% Fe (CME) closed at $93.60 (as on 11th April 2019). The factor which supported the iron ore prices was the fall in steel rebar (long-steel) and hot-rolled-coil inventory in Chinaâs domestic market, which prompted mills to procure more raw-material to fill the consumed inventory of both, long and HRC steel.
As per the data, inventories of HRC steel across the steel mills and social warehouses in China declined for a seventh week, after the seven weeks from the Chinese New Year Holiday; overall HRC stocks declined by 4.2% as compared to the previous week and stood at 3.14 million metric tonnes as on 11th April, which also marked a decline of 6.9% from a lunar year ago.
Social inventory of HRC declined by 4.5% and stood at 2.21 million metric tonnes till 11th April 2019; the social stock of HRC marked a 7.6% decline as compared to the same period after CNY 2018. The decline in the social stocks of HRC also marked a slip below the average 2018âs inventory of 2.24 million metric tonnes.
Rebar steel (long steel) inventory also marked a decline across the steel mills and Chinaâs social warehouses amid stockpiling by consumers after the Qingming Festival holiday. As per the data, the domestic trades volume of long steel including both wire and rebar was at 331,000 metric tonnes (as on 8th April). The overall inventories declined to 9.58 million metric tonnes, down by 7.3% as compared to the previous week and by 9.6% as compared to the lunar year earlier in China.
The long steel inventories stood at just 2.02 million metric tonnes across the steel mills in China, which marked a decline by 10.1% as compared to the previous week and 27.6% from a lunar year ago. Social inventories of long steel declined by 6.5% in the present week, and by 3.1% on the year; the overall social long steel inventory was at 7.55 million metric tonnes (as on 11th April).
The fall in inventory is further expected by the market participants to be filled by the mills across China; the mills in Qingming are marking a procurement as the holiday session ends in the provinces.
Chinese mills are expected to ramp up the production to take advantage of high steel prices in the domestic market amid falling inventory of steel in China. The mills are also expected by the market participants to ramp up the production in April after a decline in March 2019 amid temporary suspension of many mills across China due to poor air quality in the provinces.
On the demand side, the domestic demand of steel in China is on surge amid improvement in manufacturing activity in the domestic economy and coupled with falling inventories it is expected by the market participants to support the iron ore prices along with other steelmaking raw materials.
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