Iron ore and coal in red at year end

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02 January 2017

Year ending dip in the buying interest in China cooled the market sentiment brining down iron ore prices by roughly $1 per tonne and coking coal by $2 per tonne respectively.

Spot iron ore CFR China price for 62% Fe fines slipped to close at $79.70 per tonne on Friday last trading session. Traders are expecting the prices to remain in the range of $79-81 per tonne through the first week of 2017 as some mills are inquiring about the cargoes.

Contrary, coking coal inquiries have dried down resulting in a net fall of over $12 per tonne in the last week of December. On Friday closing, coking coal registered $240.10 per tonne CFR India and $231.75 per tone FOB Australia for Peaks Down grade. Last trading session witnessed the prices sliding by $2 per tonne. Anticipation for the first week of 2017 is for a further drop in the prices by atleast $5-8 per tonne as domestic coking coal output has come back to its average level.

Coke prices also trimmed down by $4 per tonne on year closing to $306.10 per tonne CFR India and the same drop of $3-4 per tonne is expected in the first week of January.

Overall, looking at the coming week, there is a strong expectation of the prices to stay low as the demand is stable within China while raw material supply is abundant enough to oppose any major hike.

Mills margins have improved in December and they are expecting the order books to improve as countries like India, Vietnam and Indonesia are showing positive growth in the recent times. The steel prices have spiked so much that the impact of duties like antidumping and safeguard has almost been dismissed.

This weekend (31^st Dec – 1^st Jan) is for New Year celebrations and there is a festive mood in the market. At the back of every traders’ mind there is a fear of prices sliding in the first few weeks running upto early February 2017. Caution is in the air.