This week, with the start of international global iron ore trading on Sunday, we have seen rising iron ore price of China and other producers. This price increase should be attributed to the continuation of Chinese supply and demand constraints due to the reduction of environmental pollution. Of course, China has recently begun to control prices in its domestic market. The price control trend will continue due to the growth of world iron ore prices that we have witnessed in recent days. We will discuss this issue in more detail below. Please be with Artan Press.
*** Evaluation of iron ore prices from the perspective of metal bulletins and pellets
For a more accurate evaluation of prices, we will refer to the reports of Metal Bulletin and Platts analytical magazine. On Tuesday, the Platts Institute recorded an average price index of 62% purity iron ore imported in China at about $ 222.3 per ton CFR, up $ 2.35 from last Friday. This growth rate in recent days, when steel prices have stabilized throughout the international chain, seems unexpected, and this could be a precursor to the growth of international steel prices.
*** The reason for the unexpected rise in world iron ore prices
But why did the trading price of iron ore in Dina suddenly rise? The main reason for this can be attributed to the coincidence of events limiting iron ore production. Last week, following a prosecutor’s order to evacuate the area around the Zingo Dam, Vale Company stopped production at the Timbopba mine and part of the Allegria mine. This has reduced the company’s daily production of 40,000 tons of iron ore mining. On the other hand, after the floods and the destruction of the iron ore mine in Dixian, the Chinese authorities ordered the closure and inspection of all underground mines other than coal in Shanxi Province.
These issues, which were reflected in the Metal Bulletin magazine in recent days, caused us to face an increase in demand and iron ore prices in the trading markets. It should be noted that these temporary disruptions reduce 14.6 million tons of the above-mentioned Brazilian mines and 14.97 million tons of iron ore concentrate production in Shanxi Province, China, annually.
*** The role of environmental risks in iron ore price inflammation
China has a predominantly rainy climate. Therefore, we are associated with a decrease in production and consumption in this country in the iron ore sector. On the other hand, environmental risks such as earthquakes and floods enter the global steel market and affect transactions in this area. The sum of these factors has caused the price of iron ore to rise every day since last Tuesday, reaching above $ 222 per ton CFR.
Last week, the price of billets and hot rolled sheets in China rose as the market waited for more production cuts, which further restricted steel supplies. Cities in China’s Hebei Province have announced new plans to reduce air pollution, and the trend is expected to spread to more cities. Hence, the profit margins of Chinese steelmakers seem to be improving, which creates more room for the growth of iron ore prices.
*** Predict the continued growth of iron ore prices
It seems that prices in the world market as a whole will remain high and even iron ore will set higher rates for exchange and export in the coming days. This issue can also have an impact on the Iranian market. We are in a situation where prices in the domestic market are growing with an irrational trend. Given that Chinese steelmakers have recently purchased only ports from ports as needed, and given the limited supply of domestic iron ore concentrate and the growing profit margins of steelmakers, iron ore purchases are expected to increase to complete warehouses and prices are expected to increase. In the short term in higher ports.
*** China Commodity Exchange reports on iron ore
Dalian DCE Commodity Exchange futures for September delivery fell 0.7 percent daily, or 8.5 yuan ($ 1.33) to 1,206 yuan per share, according to reports on the Tehran Iron Ore Exchange. Tons ($ 188.42). This shows that China is still controlling prices in its domestic trading market, but has no will to control global prices in the current situation. Therefore, we saw that yesterday, despite the decrease in the price of iron ore in futures trading, carat iron ore pellets increased by 62% by 5 cents and metal bulletin concentrate increased by 65% by $ 1.60.
*** Changing the strategic approach of consumers towards iron ore
The price of iron ore and its fluctuations and inflammations have led consumers to take strategic approaches to address this situation. In some factories, we are witnessing a change in the feed of the factory regarding the grade of iron ore. According to Platts, there is a desire to buy iron ore again for medium grade shipments due to the recovery of steel profit margins. Platts announced steelmakers’ profit margin on June 11 at $ 101.53 / tonne for hot rolled sheet, which showed $ 24.28 / tonne weekly growth, while the rebar profit margin remained unchanged at about $ 65.91 / tonne. Due to the re-jump in steel profit margins, some traders believe that fewer mills are moving towards a high-grade and low-grade mix in the blast furnace mix, and instead retain the medium-grade mineral mix in the mix.
*** Unprecedented consumerism in the field of crude steel
The world is moving towards steel consumerism with incredible growth. With the normalization of the situation in some countries and the exit from the Corona crisis, this consumption has doubled. A new research note recently released by BMO Capital Markets suggests a change in China’s steel industry It accounts for more than half of world crude steel production and has completed a long period of low profit margins and low capacity. BMO notes that for the first time, global crude steel demand will reach more than 2 billion tons, and Beijing’s CO2 emissions limits will be extended to the second half of 2021, so China’s exports will be significantly lower than in recent months.
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