The spot iron ore prices during the Week 12 posted further slum and went down by 3% to 5% WoW.
The quantum decline was the offshoot of an equally damning domestic steel price as the Chinese government resorted to hike in lending rates by 50 basis points to rein inflation. Contrary to market expectations the Chinese government stood steadfast in its deflationary course as the economic and political compulsions weighed heavily on the decision makers.
Mills continued circumspection withholding bids. With the stockpile at the ports hovering around 80 million tonnes there was barely any reason for urgency. Small transaction were focused on low priced cargo rather than existing stocks.
But the trend in the last few days of Week 12 have given signals of revival in the iron ore prices which has been downhill for the past 1 month having dropped by 12%.
Although steel demand is yet to pick up in the domestic market there has been some rumblings of improvement off late with stock depletion. Since most of the mills being virtually out of the market for the past 1 month the iron ore stocks have plummeted from a normal 45 days stock to 1 month compelling them to make forays in the market.
Although, it would be premature to become presumptuous about an immediate revival as the buyers are yet to come out of circumspection. The recovery in steel market still uncertain the timing of revival is a question mark.
( source: www.steelguru.com )