Some upside for spot iron ore; market remained range bound: KATM Exclusive

20 November 2017

Spot iron ore prices in the sea-borne market inched up slightly on Friday, taking mixed cues from the fundamentals as the steel curbs in China lent support to the prices. Metal Bulletin’s 62% Fe Iron Ore Index closed for the week at $62.21 per tonne CFR Qingdao, up from Thursday’s value of $61.57 per tonne.

Iron ore prices are seemingly getting range bound around the $60 per tonne mark, as the steel demand is slated to diminish in the near term due to upcoming winters. Overall steel demand is seemingly waning as the construction activities will be hit by colder weather and also due to Beijing’s crackdown on pollution.

Steel futures mark gains

Major drivers in China’s steel futures have generally been trending downward in the second half of this week, while contracts for steelmaking raw materials have largely recorded gains.

Chinese steel futures fell in the latter half of the week, mainly due to concerns regarding subdued demand in the winters. The most traded steel rebar contract on the Shanghai Futures Exchange had dropped 1.7% to 3,632 yuan ($547.56) a tonne, on Friday, as it posted its biggest weekly loss in the past two months.

At Dalian Commodity Exchange, the iron ore futures rose by 2% to close at 462.5 yuan per tonne, on Friday. Meanwhile, the coke futures climbed 1.3% to 1,836 yuan a tonne, and coking coal futures edged up 0.7% to 1,177 yuan a tonne.

Industrial indicators not so encouraging

Earlier in the week, China reported that its manufacturing sector expanded at a slower but stable pace in October. The data released by the National Bureau of Statistics (NBS) showed growth of factory output, investment and consumption in October all slowed a notch from the previous month.