China: Spot Iron Ore Prices Rise by 4% W-o-W
...
Iron ore price for Fe 62% fines has been increasing since last week. Benchmark index was assessed at USD 78/MT CFR, China as on 8th Jan'18. It closed at USD 77.1/MT CFR, China last week on Friday 5th Jan'18. However, it stood at USD 75.2/MT at the beginning of the previous week. Thus prices have climbed by around USD 3/MT against last week.
Factors driving iron ore prices in China-:
1. Anticipated supply disruption -Australian Bureau of Meteorology declared risk of a severe tropical cyclone impacting northern Western Australia. Port headland (major iron ore port), is under major threat from the expected cyclone, which can severely disrupt the iron ore supply from Australia to Chinese ports, leading to price enhancements.
2. Restocking by mills ahead Chinese New Year Holidays - The price rise is favoured by the mills restocking activities for delivery before Lunar New Year (in mid of Feb'18) and after mid-March when northern Chinese mills will resume production
3. Hike in iron ore futures - China's iron ore futures increased to highest in four months. As per the recent updates, China's Ministry of Industry and Information Technology (MIIT) has issued stricter rules this year implementing measures of a capacity replacement for the steel industry.
Effective from 1 Jan'18, the new measure requires one ton of new capacity to be built for a minimum of 1.25 tonnes of old capacity closed in China's Beijing, Tianjin, Hebei, Shanghai, Jiangsu, and Zhejiang province and nine cities in Guangdong province that are environmentally sensitive. Other regions would see the capacity replacement in the ratio of 1:1.
4. Rise in steel futures - Post announcement of steel capacity replacement steel prices moved up in both spot and futures market.
