Barely 2 week long feast in iron ore market might be over with iron ore futures dropping on Monday. Reflecting a market still struggling with a supply glut as a recent bout of restocking by steel producers may have ended.
Stocks of imported iron ore at China’s ports hit a new record high last week, piling renewed pressure on spot prices that are down nearly 30 percent for the year so far.
Iron ore for delivery in September on the Dalian Commodity Exchange eased 0.7 percent to close at CNY 707(USD 110) a tonne, after falling to as low as CNY 694 earlier in the session.
Mills were buying aggressively in the past weeks and that helped push up prices recently. Supply glut continues to torment market. Inventory of imported iron ore sitting at 44 Chinese ports stood at 113.7 million tonnes as of July 4, up 1.05 million tonnes from the previous week.
Rampaging crude steel production growing 2.7 percent to 343 million tonnes in January through May and nearly 5% YoY has not tilted the balance in favor of more imports with huge inventories remaining un-liquidated. Mills are reportedly running low on inventory but reluctant to commit owing to slow finished demand. Some expectations have been created on better demand of finished and market improving on better PMI. However apart from inventory pile up the quantum hike in supply availability from the top 3 miners is dampening any chances of near rally.
Source – Strategic Research Institute