Iron ore prices plunged amid tighter environmental regulation by Chinese authorities to curb the pollution. The benchmark iron ore future (TIOc1) prices slipped from the top value of $92.29 (which marked the day’s high on 6th February 2019) to the level of $86.51 (which marked the day’s low on 6th March) China is aiming to curb the pollution levels in line with the Euro 6 standards, which is making it hard for steel producers to operate in the region, and thus, in turn, the iron ore prices are marking a correction.
The Iron ore prices, which marked a continuous surge from the level of $66 (which denotes the closing on 5th December 2018) amid higher steel output of China and the building optimism among the market participants, are now taking a correction as more and more mills are getting shut in China to meet the high emission standards, in accordance with Euro 6 standards.
The high emission standards are also exerting pressure on the Automobile, and China’s Motorcycle market is dropping continuously in terms of both sales and production. As per the available data, the domestic production of motorcycles decreased by 14.35% as compared to the previous month and reported at 1.15 million for the month of January 2019.
The drop in the production further led the metal producers to decrease the production level of metals and steel, and China marked a decline in import of iron ore, which in turn exerted pressure on iron ore prices.
The prices were further jolted and pressurized due to the announcement of an off-peak production plan of steel by the local authority in north China’s Wu’an city in Hebei provinces. The plan includes a production cut to curb the pollution level and to restrict the oversupply of steel.
However, to gauge the direction of iron ore prices further, the metal market participants are keeping a close eye on the supply disruption caused by the Vale ban and the capacity of the Vale’s rival such as Rio Tinto and BHP to fill the interruption in the supply chain caused the Vale’s ban.
The ban on the Brazilian major iron ore producer has supported the iron ore prices recently, as it concerned the market over the supply disruption in the environment of high demand from the steel industry.
The major Vale’s rival and competitors are pulling up the socks to take the benefit of high iron ore prices, currently present in the market and their production capacity along with exploration activities to extend the production line will be monitored closely by the market participants to reckon the tightness over the supply and to decide the further price movement.
The market participants are also eyeing on the developments and increase stance of various countries to shift towards a Zero emission economy to gauge the direction of the iron ore prices soon.
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