Find below the iron ore price table for May 20, 2013:
In news, it appears the large steel inventory build, poor sales and shifting context of structural change has once again spooked Chinese steel mills. From the FT:
Analysts said that the past week’s tumble in prices had been caused by an outbreak of bearish sentiment in the Chinese steel industry, which accounts for 60 per cent of global seaborne iron ore imports. In particular, large Chinese steel mills had been selling their inventories on the market, they said.
“Chinese mills appear to be undertaking yet another iron ore destock, resulting in the usual price weakness,” said Graeme Train, analyst at Macquarie in Shanghai. “In our view, prices will continue to fall over the coming weeks until destocking is complete.”
Melinda Moore, analyst at Standard Bank in London, said that prices had fallen below the cost of production for the highest-cost producers in China and India, suggesting the market could soon find a floor.
“Current supply-demand balances remain tight and last week’s price weakness was driven by destocking pressures, rather than underlying fundamentals,” she said.
Mr Train predicted that a return to the market by Chinese mills could support the market in the second half of the year just as many participants expect a drop in prices as a result of a predicted increase in supplies.
That’s possible. But it rather depends upon how far the destock runs. Chinese port stocks last week rose a decent clip although Indian sourced stocks flattened, so it hasn’t yet been anything like last year’s huge cycle.
Worrying about where the price will be in Q3 is really besides the point. The 2013/14 supply deluge is real. Chinese structural change is real. Over time, the combination will out in the iron ore price.
