Shanghai, Nov. 16 (SMM) - The imported iron ores rebound sharply these days. The assessment price of Platts 62% increased to USD 146.25/mt, up USD 6.25/mt. And compared with the lowest points in the year, the price surged up by USD 26.25/mt within two weeks.There are three reasons behind imported ore price rally. First, the Chinese government introduced a series of measures to fine-tune monetary policy since mid-October, helping ease the tightening money supply. Moreover, steel supply pressures eased after steel mills cut production for nearly one month, and steel prices showed signs of stabilizing in response. Second, some steel mills need to replenish inventories after a period of destocking. Furthermore, imported ore enjoys price advantage compared with domestic ore after significant declines in imported ore prices, so steel mills preferred to purchase imported ore. Third, overseas mine operators showed little interest in selling goods after iron ore prices fell sharply, and bid requests from BHP Billiton and Rio Tinto were down significantly as well recently. In this context, imported ore prices show signs of rising amid improving demand and declining supply.
Steelease believes this round of price rallies should be short-lived. First, downstream demand for steel products has not improved substantially despite eased credit, coupled with current low-demand period for steel products, steel prices still lack strong upward momentum. Second, finished product inventories held by steel mills remain very high, and financing costs are high as well, so steel mills should only make limited purchases, which will have only minimal effect on iron ore prices. Mostly importantly, bid requests from BHP Billiton and Rio Tinto are expected to increase significantly in late November, which will help increase market supply of iron ore.