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| Iron ore price rebound maybe short lived - Analysts - 28 Dec, 2008 | ||
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It is reported that China's imported iron ore stockpiles sitting at major seaports reduce to 59.99 million tonnes on December 19th a massive drop of 14 million tonnes from the month before. Hectic buying has also pushed up spot ore imports price at the moment, however, the price rebound may be short lived. 63.5% Indian ore fine has risen to USD 80 per tonnes from USD 67 per tonnes in early November, while 66% ore concentrate price also gained 14% to CNY 722 per tonnes in Tangshan, Hebei. And BDI, a measure of shipping costs for commodities, clawed back 20% of its loss in past ten days. Mr Zeng Jiesheng analyst said that the price surge is resulted from temporary recovery of steel market. He said that rebounding steel price has encouraged a number of mills to resume production, especially those who purchase raw materials mostly from spot market. Some private mills in Tangshan are the first to resume production, followed by other smaller producers in North and East China, where iron ore price now has a big spread over other regions. Moreover, many bigger mills have also ramped up production these days. Mr Zhao Zhicheng, analyst with Essence Securities believes that Beijing's CNY 4 trillion stimulus package has boosted iron ore demand stemmed from public projects but more mills are buying to replenish thin ore stock and the real demand has yet to revive. According to senior port official, Rizhao port, a major port handling iron ore imports has seen falling stock since November bolstered by increased purchase from buyers in Shandong, Shanxi, Hebei, Henan and Shaanxi. However, he said that the steel price rebound may not sustain for long given worldwide economic slowdown. Meanwhile, Indian exporters have raised up offer price for spot shipment to China as Beijing vows to stimulate its economic growth. However, domestic steel market may point to downside further at the year end due to sluggish downstream and export demand. Industrial analysts said that iron ore demand has yet to recover completely since small and medium mills resuming production accounts for merely 20% of the country's steel capacity. Over half of the large state owned mills would continue to suffer loss and the iron ore demand may not gain substantial support once those mills have not utilized full capacity. Moreover, bulk amount of low priced high grade Australian ore imports are flooding into the spot market, which would further reduce the market share of Indian spot imports and arrest the upward spiral of the price rally. (Sourced from www.Mysteel.net) Visit www.Mysteel.net for real time access to China steel news! | ||
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