Iron ore futures in China rose to their strongest in more than three weeks on Thursday, supported by recent gains in steel prices as shutdowns tightened supply. But a subsequent retreat in Chinese steel prices suggest the gains in glut-hit iron ore may be shortlived. Shanghai rebar futures slipped from a four-month high. “We saw a rally in steel prices due to shutdowns and maintenance, but given there’s no support from underlying demand, the rally was shortlived,” said Wang Di, analyst at CRU Group in Beijing. Some of the mills shut due to weak demand in China.
Apparent steel consumption in the world’s top steel user declined for a second year in a row in 2015. The most-traded May iron ore on the Dalian Commodity Exchange touched a session-high of 326.50 yuan ($49.65) a tonne, its strongest since Jan. 4. It was up 0.9 percent at 324.50 yuan by midday. On the Shanghai Futures Exchange, May rebar was down 1 percent at 1,839 yuan a tonne, after hitting a four-month peak of 1,871 yuan on Wednesday. There was a pickup in physical trading activity in iron ore in China ahead of the week-long Lunar New Year holiday in early February, but volumes were modest.
“There’s some buying for Chinese New Year but it’s smaller in scale compared to previous years,” said Wang. Iron ore for immediate delivery to China’s Tianjin port .IO62-CNI=SI climbed 1.2 percent to $41.30 a tonne on Wednesday, according to The Steel Index.
Fortescue Metals Group, the world’s No. 4 iron ore miner, expects to achieve a cash breakeven price well below $36 a tonne after the company reported it had cut its production costs faster than planned. Traders are keeping an eye on possible shipment disruptions in Port Hedland, the largest iron ore export terminal in Australia, where vessels are being evacuated as a tropical low weather system approaches.
Port Dampier, one of two ports used by Rio Tinto to ship iron ore, will also evacuate vessels.
Source: hellenicshippingnews