7marketSpot IRON ORE: CHINA, CHINA, CHINA

http://7marketspot.com/archives/6000

7marketSpotGlobal Economy Library

Home

Home Contact Economy & Commodity Statistics Log In

IRON ORE: CHINA, CHINA, CHINA

23.05.2011 | Author: marketmaster | Posted in Commodity Analysis IRON ORE: CHINA, CHINA, CHINA 23 may 2011 Its hard to be negative iron ore when China dominates global demand, and supply is tightly controlled by three mega mining companies. The issue is a lot of positive news has been priced in. Further gains will depend heavily on the ability of steel mills to pass on the higher input costs. We expect prices to peak in the US$180-185/t price range in the coming quarter, and ease back US$20/t in the second half as strong seasonal steel demand and prices pass. Quarterly iron ore contract prices will rise 41% YoY to an average US$161/t in 2011. China steel prices remain the bellwether. The 12-month rolling correlation between iron ore and China hot rolled coil prices has tightened to 0.92 in 2011 (from 0.84 in 2010). The second quarter tends to be the strongest period for steel demand, but a healthy rebound in prices since early March is now starting to wane. Warning signs for lower steel prices are becoming apparent, with a number of the larger Chinese steel mills flagging lower monthly contract steel product prices in the coming months, the first price cuts since August last year. Re-diversion of earthquake impacted Japanese iron ore volumes is easing tight supply conditions. However, the supply gains appear limited, with lost volumes being quickly absorbed into the north Asian market. Suspended Japanese steel capacity should also return quickly as power availability is restored. The return of previously banned Indian iron ore exports creates a larger supply response. We believe the rebound wont be strong, with the imposition of higher export taxes and freight duties reducing customer appetite. The seasonal lull in third quarter Indian export volumes also looms as monsoonal weather limits mine and port operations. Despite these price drags, we dont expect prices to fall far. The strong supply response from China is creating a much higher industry cost profile. In an attempt to limit the already high dependency on iron ore imports, China is exploiting and developing extremely lower quality iron ore deposits (with grades down to 15% iron content). This marginal output (we calculate is not profitable under $120/t) is creating a very high floor on international prices. Demand conditions will remain buoyant with Chinese steel and iron ore demand forecast to rise 6.6% in 2011. The roll-out of the 12TH Five-Year plan includes the extensive infrastructure build-out of rural western provinces. A push for increased affordable public housing supply will also ramp-up steel demand, with apartment output to rise from an average 5 million units per year in the past 10 years to 7 million units over the next five years. Demand elsewhere will continue to rise off a low base. US output could surprise on the upside, with the economic recovery increasingly gathering pace, and the lower US dollar limiting competing steel imports.
Iron Ore Prices www.thesteelindex.com For 62% Fe and 58% Fe Content Fines CFR China Port. Free Trial! 2011 Gold Opportunity UFXBank.com/Open+Account+in+5min Take a 100% Risk-Free Opportunity To Try Out Gold Trading at UFXBank! Stainless Steel Wire www.fairbankswire.com Medical Wire 304V 316LVM Small Quantities - Quick Deliveries 2011 Gold Opportunity UFXMarkets.com/Open+Account+in+5min Take a 100% Risk-Free Opportunity! Try Out Gold Trading at UFXMarkets

1 of 6

6/13/2011 2:45 PM

7marketSpot IRON ORE: CHINA, CHINA, CHINA

http://7marketspot.com/archives/6000

2 of 6

6/13/2011 2:45 PM

7marketSpot IRON ORE: CHINA, CHINA, CHINA

http://7marketspot.com/archives/6000

3 of 6

6/13/2011 2:45 PM

7marketSpot IRON ORE: CHINA, CHINA, CHINA

http://7marketspot.com/archives/6000

[Translate]

4 of 6

6/13/2011 2:45 PM

7marketSpot IRON ORE: CHINA, CHINA, CHINA

http://7marketspot.com/archives/6000

Iron Ore Prices

For 62% Fe and 58% Fe Content Fines CFR China Port. Free Trial!
www.thesteelindex.com

Related posts: 1. 2. 3. 4. 5. iron ore production and reserves Nickel: OVERSUPPLIED? Chinas total crude steel production capacity is likely to rise Steel production and consumption in China Chinese steel futures rose to more than two-month highs Comments are closed

2011 Gold Opportunity

Take a 100% Risk-Free Opportunity! To Try Out Gold Trading at UFXBank

www.UFXBank.com/Gold

Additional Articles From "Commodity Analysis"

Metal: The Chinese Copper Market in June 2011: Cautious Optimism Metal: Short-term demand-side risks to the lead market in China appear on the whole transient and should not detract from a generally constructive fundamental story Energy:Vienna: Goodnight OPEC Energy: New lows for coal Energy: Snakes on a plane Energy:The swelling risks: Yemen and Iran A potential VAT rebate on Chinese coal imports is an upside risk to prices, though this is far from assured at this stage LNG Watch :North America Imports Running at Similar Levels to Last Year Palladium Fundamental Platinum Fundamental

Authorization
Login: Password: Remember me RegisterLost your password?

Advanced Search

5 of 6

6/13/2011 2:45 PM

7marketSpot IRON ORE: CHINA, CHINA, CHINA

http://7marketspot.com/archives/6000

June 2011 M T W T F S S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 May

Archives
June 2011 May 2011 April 2011 2011 7marketSpot Global Economy Library

6 of 6

6/13/2011 2:45 PM