Iron ore and steel prices register slow movement than expected

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27 February 2017

Iron ore and steel prices were expected to rise last week after Chinese domestic steel and iron ore prices moved up by $8-11 per tonne and  $12-14 (RMB 85-90) per tonne respectively. Tangshan domestic iron ore shot up to RMB 840 per tonne while billet rose to RMB 3350 per tonne.

The rise in the domestic prices was expected to be replicated in the steel exports and iron ore imports at the same time but to the surprise of all and weaker export market situation the rally fizzled out much earlier than expected.

HRC prices from China rose by $2 per tonne to $515 per tonne at week closing on offer basis and $507 per tonne on actual transaction basis in FOB China terms. Rebar was more cautious at $ 440 per tonne hardly changed from the week before.

Iron ore imports slipped to $90.40 per tonne at week closing after reaching $96 per tonne. Port inventories are in the range of 112-114 million tons with room for more imports in the coming weeks.

Mills are very cautious again as market is fragile and traders are unwilling to take positions. Every rise or fall in the steel and iron ore levels is being carefully tested by the participants. In in the absence of any bullish sentiment for exports, raw material prices may remain range bound in short term.