The excess supply iron ore might lead to the price fall sharply
Writer： admin Source： 未知 Date：2017-04-18
In the first quarter of this year, iron ore prices is like a parabola, as optimistic about the prospects gave way to worries in
supply will be more than demand, leading to futures prices fell again on Friday.
China one of the most active futures in Dalian Commodity Exchange traded once fell 3.3% to 540.50 yuan ($78.4) per
ton; Closing 552 Yuan, fall by 25% than last month high point. The Singapore exchange iron ore futures fell six days to
five days, only slightly higher than at the start.
Chinese steel enterprises production increasing driven the demand, iron ore prices soared last year, and the rally continues
to earlier this year. But the analysts expected supply will rise, especially from China, and after the steel decreases
production, iron ore prices fell down this month. The worries excess supply of iron ore is intensifying.
On the basis of the premise, Barclays bank also made bearish forecast, Barclays says, steel mills profit index faced with
the risk of a sharp decline. In Barclays viewpoint, steel mills profit fell may result in China's iron ore consumption turn to
lower ore. If that happens, the benchmark iron ore prices will fall sharply.
At the same time, the iron ore inventories rose to record levels, as of March 17, the iron ore inventories of 45 ports in
China is 131 million tons. In China, the iron ore inventories has amounted to 117 million tons. In light of China's current
preference for high grade ore, Barclays says, although inventory innovation is high, but the market does not immediately
weaken iron ore. However, demand for steel will slow, cause a downturn of the manufacturer's profits. If this happens,
China's factories will restore love of low grade ore, this will make iron ore prices fell sharply. To predict the second half
of 2017 prices will converge to about $55 per ton.
Prices in the short term has peaked, afternoon will fall back. The Chief economist of AME Group Ltd. Mark Pervan said.
The decline will depend on two key factors: China's steel prices and China's iron ore miner's response. On the basis of the
premise, and according to the Metal Bulletin Ltd., Qingdao port 62% grade iron ore spot last month rose to nearly $95 per
ton. Is the highest point since August 2014, at $81.78 on Thursday. The benchmark prices rose after January and
February, has dropped 10% this month.
China is the largest steel producer in the world, occupy half of the global supply, and is the largest iron ore buyer.
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