Daily iron ore price update (stability)

…some traders, though generally pessimistic, said the market was showing signs of bottoming out and might see modest improvements in the next few weeks.

“Everyone is still cautious but I think things are stable and don’t think there is any more bad news that can make it worse,” said a trader based in Beijing. “It will still be difficult this year, but I think demand is improving.”

Steel oversupply still preoccupies the domestic market, with latest estimates from the China Iron and Steel Association (CISA) indicating that daily output rose by 0.7 percent in early March, bringing runs to their highest level since mid-November, despite efforts by big mills to cut production.

According to the CISA-affiliated industry consultancy Custeel, stockpiles at major steel mills also increased 2.52 percent over the period, reaching 16.66 million tonnes by early March.

CISA, in its monthly market report published late on Tuesday, said output had risen more quickly than expected over February, leading to a glut in the market that has eaten away at the prices of most major products. It said by mid-March, its China steel price index had fallen to its lowest level since February 2006.

It said steel product inventories reached 20.86 million tonnes by the end of February, up 33.76 percent on the month, and while demand had increased in early March, high stocks would continue to pressure prices.

CISA also said yesterday that March daily production as at 2.1 million tonnes, up 7% from February and probably up a little year on year as well but I’ll take the 5th on that and accede to Mac Bank that CISA data at this time of year is rubbish:

CISA also said that the consensus among its members was that iron ore will trade between $100 and $110 this year. That’s important as a guide to when mills will think restocking is good value, or not.