Iron ore prices fluctuates, Buyers confused

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16 January 2017

Iron ore buyers are unable to decide on whether to stock-up pre-holidays or wait till post-holidays as the mills are cutting down their capacities which is not a healthy indicator. Iron ore prices are continuously fluctuating with a rise of $1-2 per tonne followed by a dip of $0.5-1 per tonne which clearly shows that though the market is bullish about the demand, the future course seems to be heading for a bearish sentiment driven by slowdown in steel making and futures market.

Traders indulged in hedging of ore have also been really pessimistic about the future course of the prices as mills are not actively looking to restock and stockpiles at ports are over 108 million tonnes.

Iron ore was down to $80.70 per tonne on week closing at CFR basis and is expected to swing about $1-2 per tonne in the coming week.

Coking coal is inturn supporting the lower grade buying intent of the mills as dropping price of coking coal is allowing the iron ore buyers to pick up lower grades from India or Indonesia. China’s domestic mining has slowed down due to winter season and it is supporting the purchase lower grade imports.

Steel prices in China have also kept the morale of the iron ore and coking coal buyers down. HRC was stuck at $495-497 per tonne and rebar at $425-427 per tonne on FOB Basis in China. Also, at the weekend Tangshan steel square billet fell RMB 50 per tonne to RMB 2,840 per tonne at Tangshan.