UNITED KINGDOM February 08 2017 2:23 PM
LONDON (Scrap Register): January saw a sharp uptick in spot iron ore market activity, as pre-Chinese New Year restocking drove up prices, reported the Steel Index. TSI recorded a total of 86 transactions, up 26% compared with December.
The increase in floating price trades was noticeably marked—63% of the total were traded against an index. 35% of all spot transactions recorded were against the TSI 62% Fe iron ore index (note that TSI only uses trades against TSI 62% Fe or the Platts IODEX 62% Fe indices).
China’s steel exports for 2016 fell 3.5% compared with the record set in 2015, though remained high at 108 million tons.
Chinese mills have been feeling optimistic for their 2016 performance after last year’s surge in finished prices, coupled with an end of year fall in coking coal prices. Wuhan Iron & Steel (Wisco) and Bengang Steel Plates (Bengang) are expected to announce healthy y-o-y increases in profits for 2016.
Chinese steelmaker Maanshan Iron & Steel said late before the Chinese New Year holiday it expects a net profit for 2016 of Yuan 1.2 billion ($179 million), compared with losses of Yuan 4.8 billion the previous year.
After falling in the second half of December, steel prices in China began moving upwards again in January as traders restocked ahead of the Lunar New Year. This helped underpin firmer iron ore prices. However, inventories are now reported to be relatively high after a period of replenishment.
China’s authorities have warned local officials about their failure to commit to cutting overcapacity in the steel sector, having discovered a number of firms continuing to operate illegally.
The official manufacturing PMI for China came in a touch lower, at 51.3 (just 0.1 lower than the December reading) but above expectations, prompting futures in Singapore to nudge slightly higher.
Meanwhile, China’s dedicated purchasing managers’ index (PMI) for the steel sector climbed by 2.1 basis points on month in January to 49.7 points, indicating an improvement in the country’s steel industry, according to index compiler CFLP Steel Logistics Professional Committee.
