May 27, 2015
Global iron ore prices staged a recovery last month reversing a trend that witnessed a sharp fall in past months. Prime grade ore with iron content of 62% (Fe 62% grade) rose nearly 10% to $56.2 per tonne, in what markets term a relief rally on a month on month basis in April. Ore with Fe content of 58% gained 2.1%. However, domestic iron ore prices fell due to higher availability. This is expected to add stability to steel prices according to analysts.
Ore prices had shrunk to an almost ten year low in beginning of April 2015. The upturn, close to the biggest gain in prices in nearly two years was led by Australian giant BHP Billiton announcing a slower pace of expansion. Last week, Brazilian mining major Vale announced production cuts to contain price fall in iron ore. All eyes are on Rio Tinto and its iron ore strategy as the company is slated to hold its annual general meeting this week. Together with Fortescue group, BHP, Vale and Rio Tinto account for nearly three quarters of the global iron ore supplies.
Seaborne supply of iron ore will exceed demand by over 50 million tonne this year, rising to 184 million tons in 2018, according to estimates by Morgan Stanley. That is likely to keep the price outlook to a range of $55 to $65 over the medium term.
Domestic iron ore prices though, fell due to higher availability. This could lead to stability in domestic steel prices, according to analysts. "While steel prices have fallen around 2.5% during the month of April, there have been some indications of price consolidation in last couple of months," Goutam Chakraborty, Analyst-Institutional Research at Emkay Global said in the latest metal sector report. "During the month, the CIS Export (free on board f.o.b Black Sea) hot rolled coil (HRC) prices fell almost 3% to $367.5 per tonne, after mostly hovering at over $370 per tonne. China HRC prices fell 1.1% month on month to $409 per tonne, we expect some stabilization here," the report added.
Source: The Economic Times