Iron ore and steel fall as recovery remains distant
Seaborne iron ore prices lost recent gains and Chinese steel futures prices fell yet further on Tuesday. Surveys confirm increasing despair that the often-hoped-for “… golden September and silver October” would remain steely grey this year.
The Kallanish index for 62% Fe Australian fines fell back sharply after Monday’s surge to $53.75/dry metric ton cfr Qingdao. Three fixed price cargos closed on globalORE. 110,000 tonnes of Carajas fines sold for $62.5/t for October delivery, followed by 80,000t of Yandi fines traded at $51.50/t for October delivery. The lowest deal of the day was for 170,000t of PB fines however, which traded at $54/t for November delivery, suggesting falls are expected.
The January rebar contract on the Shanghai Futures Exchange closed down CNY 17/t at CNY 1,891/t ($297/t), while the same contract for hot rolled coil closed down CNY 10/t at CNY 1,915/t.
A survey by Macquarie showed a fall in sentiment after some stabilisation in August. The core story is that hopes of a demand recovery in the coming weeks are fading. Mills and traders have seen orders fall so far this month.
Going forward, the key factor may be steel production levels. As steel prices are now sliding faster than iron ore, mill margins are minimal at best. Demand meanwhile is weak but relatively stable. A sharp fall in output could therefore further reduce steel market inventories and lift steel prices from historic lows. That would also mean strong downward pressure on iron ore prices however.
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Anonymous
Very good overview of the weekly steel market.
Anonymous