Daily iron ore price update (Baosteel cuts)

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Find below the iron ore price table for May 9, 2013:

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Rebar futures were down slightly.

In news, the WSJ reports that Indian iron ore will remain offline for the foreseeable future:

India was once the primary source of spot-market iron ore for China, the world’s largest consumer. But its share started to decline 18 months ago after the Supreme Court halted production at mines in the southern state of Karnataka because of illegal mining.

The court recently lifted the ban on the majority of the mines, but imposed conditions for resuming operations that could take up to a year for most to comply with. It has also prohibited exports indefinitely.

“India’s export growth is likely to be a single digit this financial year [started on April 1],” the federation’s vice president, Basant Poddar, said by telephone.

Halting production at the Karnataka mines could lead to the permanent closure this financial year of 60 to 70 makers of sponge iron–an intermediate product for making steel, Mr. Poddar said.

Factory “units that are not near ports are not able to import as its too expensive,” he said.

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I was unaware of the ongoing export ban for Karnataka so that’s good news for Australian producers. Indian sourced stockpiles began rising last week in China so maybe the domestic supply from Karnataka is pushing others to export, or it’s data glitch. We shall see.

Before we get too excited I’ll note that the following chart already assumes no return of India iron ore:

Capture
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Meanwhile, in China, steel weakness persists. From Reuters:

China’s biggest listed steelmaker, Baoshan Iron & Steel, will cut its main steel product prices for June, its first reduction in nine months and underscoring demand worries amid a fragile economic recovery.

Pricing moves by the firm, known as Baosteel, usually set the tone for the wider steel sector, with the cut coming as China’s steel demand falls short of expectations and as a supply glut worsens.

With high raw material prices already forcing some steelmakers into the red in recent months, mills could start to cut production, weighing on iron ore and coking coal prices and denting profits at global mining giants such as BHP Billiton and Rio Tinto .

Baosteel, which kept May prices steady after five straight months of hikes, will cut June prices of hot-rolled coil mainly for manufacturing by 180 yuan ($29) a tonne and cold-rolled coil, principally for autos and domestic appliances, by 150 yuan a tonne, the company said on Thursday…

Second quarter iron ore prices seem set to disappoint.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.