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Iron ore price rises on firmer steel outlook, but trade tensions cap gains
Lower Chinese steel product inventory driven by robust exports also supported iron ore prices above $100/t.
China Iron & Steel Association (CISA) warned about speculation risks in the market, as the trend for the iron ore index was deviating from the supply and demand fundamentals and the spot market, the Xinhua official news agency reported on Sunday.
Benchmark Platts iron ore index had surged 15%, as of last Friday after the holidays, Luo Tiejun, vice chairman of CISA, told Xinhua in an interview, adding that prices for steel products dropped 9% between Feb. 3 and March 13.
“Iron ore prices rose 20% at same period last year due to Brazil’s tailing dam disaster,” said Luo. “Now it rose obviously again, (which is) more driven by capital and sentiment.”
Iron ore prices have been volatile since late January, when the coronavirus broke out across China and disrupted economic activity.
The most-actively traded May contract of iron ore futures on the Dalian Commodity Exchange plunged to a near three-month low in early February but picked up 13% since Feb. 10.
Luo Tiejun suggested the compiling of spot iron-ore price index should be based on real transaction prices in spot market and free from the impact of financial derivatives like futures and swaps.
He also called for related regulators to strictly supervise iron ore price indexes, iron ore spot and futures trading and crack down on irregularities and vicious speculation.
China’s iron ore imports rose 1.5% over January and February compared with same period last year amid firm demand at mills and stabilising shipments from big miners.
The CISA had a teleconference with Brazilian miner Vale SA’s representative in Shanghai, who pledged the epidemic had not caused any concrete impact on its operations and logistics, the association said on its website last week.
(By Min Zhang and Shivani Singh; Editing by Amy Caren Daniel)
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