gold stocks postpage LB desk

Is Iron Ore Demand Boom Topping Out?

  • May 10, 2019 09:46 PM AEST
  • Team Kalkine
Is Iron Ore Demand Boom Topping Out?

Iron ore prices are revolving around the level of $94 from past few trading sessions amid mixed fundamentals in the global market.

non AMP MTF 10th feb webinar

The prices of Iron ore fines 62% Fe futures on Chicago Mercantile Exchange (CME) settled at US$94.24 (as on May 9th, 2019) and closed on Dalian Commodity Exchange at RMB 644.50 (as on May 9th), up by 0.23% as compared to its previous close. The prices of iron ore are currently trading at US$94.27 (as on May 10th, 2019, GMT-4 4:52 AM), up by 0.03% as compared to its previous close on CME.

In the current scenario, the steel inventory in China is either building or declining at a lesser rate.

The social and mills inventories of hot-rolled coil (HRC) steel is ramping up. As per the data, the overall HRC inventory increased by 0.2% from 5th to 9th May to stand at 3.04 million metric tonnes (as of May 9th). The increase marked a rise for the second consecutive week, as the overall (including Social and Mills) HRC stockpiles climbed by 2.7% between 25th April to 5th May.

An increase in social warehouses inventories is mainly driving the overall gain in the HRC steel inventory. As per the data, the social inventory inched up by 1.9% and stood at 2.13 million metric tonnes for the week ended May 5th, 2019. On the other hand, stock across steel mills fell by 3.6% during May 5th to 9th, as compared to the previous week to stand at 911,300 metric tonnes.

The rise in inventory along with the production ban in Tangshan could hamper the procurement of iron ore by the Chinese mills, which in turn, could exert pressure on iron ore prices.

Apart from a rise in the inventory of HRC, China is also noticing a falling rate of decline in long-steel segment. The purchase of steel-rebar (long-steel) post-Labour Day reduced the steel rebar inventories, albeit, the reduction in inventory was much less as compared to the decline on the week before the holidays in China.

As per the data, the overall rebar inventories dropped by just 1.8% and stood at 8.37 million metric tonnes (as on 9th May), as compared to a drop of 4.4% two weeks ago.

The gain in inventory coupled with a pressure from the bilateral disagreement between the United States and China could hamper the high steel prices in the global market, which in turn, in a cascade could hurt the sentiments of iron ore procurers.

In a nutshell, the steel inventory in China is picking up, and significant steelmaking provinces in China is witnessing a suspension amid smog alert, which in turn, could reduce the iron ore demand. Apart from that, the expected fall in steel prices by the market participants amid U.S-China trade war could prompt the mills to restore the production to the normal levels, which could further add to a fall in iron ore demand.

On the supply side, the vale production loss is currently indemnified by the latest shipment arrivals across the Chinese ports from Brazil, and mills are still holding high inventory of the iron ore, which could further stop them to procure more iron ore on such high prices.


Disclaimer

This website is a service of Kalkine Media Pty. Ltd. A.C.N. 629 651 672. The website has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. Kalkine Media does not in any way endorse or recommend individuals, products or services that may be discussed on this site. Our publications are NOT a solicitation or recommendation to buy, sell or hold. We are neither licensed nor qualified to provide investment advice.

 

 


Disclaimer
The website https://kalkinemedia.com/au is a service of Kalkine Media Pty. Ltd. (Kalkine Media) A.C.N. 629 651 672. The principal purpose of the content on this website is to provide factual information only and does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stock of the company (or companies) or engage in any investment activity under discussion. We are neither licensed nor qualified to provide investment advice through this platform. In providing you with the content on this website, we have not considered your objectives, financial situation or needs. You should make your own enquiries and obtain your own independent advice prior to making any financial decisions.
Some of the images that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed on this website unless stated otherwise. The images that may be used on this website are taken from various sources on the web and are believed to be in public domain. We have used reasonable efforts to accredit the source (public domain/CC0 status) to where it was found and indicated it below the image. The information provided on the website is in good faith, however Kalkine Media does not make any representation or warranty regarding the content, accuracy, or use of the content on the website.

 

   
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it. OK