Expectations for 2017-18: Iron ore, steel and coal

Exclusive

06 March 2017

Iron ore

Iron ore prices are likely to go down to $45-50 per tonne from the current levels of $92 per tonne. Mainly supported by domestic iron ore concentrate prices within China and rising production levels of iron ore in Brazil, Australian and Iran, the market is expected to see some good flood of the commodity by 2^nd quarter. This may not all the commodity to rise back to $100 per tonne once again. Some of the Singapore based traders are again anticipating iron ore to go down as low as $35 per tonne. Australian banks are expecting the commodity to slip to $40 per tonne and Indian exporters are bit more optimistic at $50-55 per tonne.

Steel

Steel has a long way to rise in the global markets. Steel prices dipped from the earlier $550 per ton levels to $270 per tonne levels in 2016-17. Current rise is supported by fragile demand springing up every now and then at some part of the globe. Consistency in order books is not yet achieved in 2017 and mills are suffering whether its India, China or USA. Every country is now focused on saving its domestic steel industry and for this purpose they are openly opposing any foreign material. This situation will not help the steel prices much in long term and trade frictions will only damage the price graph with abrupt and sudden disruptions. The demand pick up in the South Asian markets is expected around the 3^rd quarter while EU, Russia and Latin American countries may have to wait till the last quarter.

Coking Coal

Coking Coal is one commodity which is dependent on two factors – coal mining in China and supply by the miners. All major steel producing nations are dependent on this coal imports and the price is set on the onset of a good demand. With demand bleak and no mining restrictions currently the pricing have slipped down to $160 per tonne levels (CFR China) but it may not be long before the pricing rise back to $180-190 per tonne levels by year end as expected by Austrlian miners. They are quite bullish with the demand from the importing countries especially China, Japan, Korea and India.