Iron Ore Market Update
Market Commentary
Iron ore futures extended its slide below $140 as Beijing rolled out its production cuts plan further. Some steel mills in Guangxi and Sichuan province are ordered to stop operations by environmental inspections authority, according to Mysteel reports Guangxi as another major steel making region has ordered its local mills to cut 30% production for Sept. On top of that, a member of the monetary policy committee of the China Central Bank, said that China’s macro economy may return to a near conventional state in the fourth quarter, the fundamentals of commodity supply and demand have not changed, and the rise in prices is a short-term phenomenon.
Iron ore prices still have room to fall further as production curbs are being enforced on the ground, Huatai Futures Co. analyst Wang Haitao said in a note. Liquidity in seaborne market remained thin now, Platts quoted from an international seaborne market participant “We may not even see a seasonal uptick in iron ore demand with the production cuts”. However, some trade participants believed that the output cut will be minimised to meet high steel demand during the peak season, and daily crude steel output would stay around the late-August level which was approx. 2.87 million mt per day from Mysteel data during the Aug 21-31 period.
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