The price of iron ore has risen for the third straight day as traders shrug off market jitters in Shanghai and persistent oversupply worries.
At the end of the latest session, benchmark iron ore for immediate delivery to the port of Tianjin in China was trading at $US52.20 a tonne, up 1.6 per cent from $US51.40 a tonne in the prior session.
The recent stability in the commodity’s price has belied a roller-coaster ride on the Shanghai stock exchange that has raised concerns about the strength of the Chinese economy, the world’s largest consumer of iron ore.
However, reports of sluggish Australian exports appear to offset the demand concerns, helping drive a recovery that has iron ore trading around a one-month high.
“Since the start of the month, exports have been particularly disappointing in Australia, where scheduled maintenance at some terminals appears to be affecting shipments,” Goldman Sachs’ Christian Lelong wrote in a note.
“Stock levels may start to grow modestly in the months ahead as supply growth accelerates once again but ... this is likely to come at the expense of further price declines.”
Macquarie has echoed similar negative sentiments about the back-end of the year, warning that a temporary Beijing crackdown on air pollution could limit iron ore demand in September.
The crackdown will likely involve limits on steel production in Hebei province, which surrounds major iron ore port Tianjin.
“Steel mills near Beijing, particularly those in Hebei province, will probably be forced to shut down production again,” Macquarie said in a research note. “This clearly spells trouble for iron ore prices.”
The move from Beijing is designed to improve air quality during World War II commemorations.
Source: Business Spectator
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