Strong demand from China holding Iron ore price

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24 October 2016

Iron ore rally hasn’t fizzled out as expected early last week due to disruptions in Australia and the unexpected rise seen in the Chinese steel futures which touched nearly 3 months high.

China’s strong and consistent steel production is not easing the iron ore situation in China. Stockpiles at various major ports are seen contracting while winters are approaching; hence iron ore prices could keep the rising rhythm in sync for some few more weeks.

The iron ore prices ended last week inching up touching $59 per tonne CFR China. 62% Fe fines reached $58.72 per tonne CFR China. The rally could find support from Rio Tinto’s decision to cut down shipments further this year. Rio has revised downwards its iron ore shipment guidance for 2016 due to port and rail maintenance during the September quarter. It now expects to deliver 325-330 million tonnes of iron ore from its Pilbara operations, down from its previous target of 330 million tonnes.

Good news for Indian exporters is that the gap between the various grades is widening again and resumption of mining activity and exports from Goa, exporters may fetch more dollars for their low grade ore.