SINGAPORE, May 22 (SMM) – Iron ore prices may see a catch-up rally in the next few weeks as fundamentals appear strong in the short term, according to Ian Roper, general manager of SMM International.
While the market was oversupplied by some 80 million mt last year, some 30 million mt of iron ore have been lost this year from Anglo American’s Minas Rio operations and Rio Tinto’s Iron Ore Company of Canada (IOC), Roper told delegates at SMM’s Iron Ore & Steel Seminar on Tuesday May 22 in Singapore.
In addition, BHP has downgraded its iron ore output guidance for the 2018 financial year.
“We’re going to see a decline of iron ore supply this year, and it will continue to decline in future,” Roper said.
But “there is no doubt steel demand right now in China is very, very strong”, he said. “We’re increasingly positive for the second half [of the year].”
SMM’s steel purchasing managers’ index (PMI) in April marked the strongest level since October 2016, China’s new lending last month was also strong, and Roper sees a supported housing market in the country.
China’s initiatives in shanty house redevelopment and social rental housing are indications that the construction sector will do well this year, he said.
“The market may start to worry there is too little steel given how steel inventory is drawn,” Roper added.
China’s hot-rolled coil inventory stood at 3.12 million mt as of Thursday May 17, down 26.2% from the same period last year, SMM data showed. Rebar inventory declined 3.5% on the year and stood at 8.07 million mt.
However, Roper added that the longer-term iron ore outlook remains bearish due to China’s shift to more electric arc furnace (EAF) steel production and the increasingly available pool of scrap resources.
For editorial queries, please contact Daisy Tseng at email@example.com
For more information on how to access our research reports, please email firstname.lastname@example.org