Despite surge in sea freight, spot prices of Indian iron ore on FOB basis continue to remain strong and have gained 1.3% to 2.5% in last 4 days.
Freight rate have climbed to almost USD 25 per tonne taking CFR China prices close to USD 105 per tonne.
Factors affecting the iron ore prices are
1. Rise in Chinese domestic steel prices
Chinese domestic steel market has been facing too many ups and downs off late. However, after the last low levels in mid October, prices have recovered by more than 5% in last 30 days
As a result, almost all Chinese steel majors have announced price increase, pushing the market sentiments further up, which in turn is supporting higher pries of iron ore.
2. Curtailed availability
Due to Indian iron or mining mess, availability of spot cargoes from India is reported to be curtailed, or at least sellers are successful to some extant in propagating this feeling pushing prices up
3. Increased sea freight
sea freight from India to China has increased form about USD 16 to USD 24 per tonne, which has further pushed the CFR levels up to about USF 105 per tonne for 63%/62.5% grade.
But it is difficult to say that how long the party would as demand for steel and consequently iron ore, may begin to slow down as some of the construction projects in Northern China are starting to be suspended, due to heavy snowfall.
We are reproducing an article on Chinese long product market in this regard “Snow cools down Chinese long product market”
The price movement Chinese long product market in last in last 6 days, ie since last high on November 11th 2009, signals ominous clouds on the horizon although this reversal is being attributed to slowdown in construction activity due to heavy snow fall in some parts of China.
The changes in Chinese Long Product Price Index CLPPI, which although lost only 37 points or 09.6% during this period, reflects that long products prices in Chinese domestic market are in negative sentiments pointing to possible downward correction in coming days.
Chinese construction steel price started to rebound in October. The trend of increase did not last for long as both the demand of spot steel impacted by the bad weather and the adjustment of rebars price caused the reduction of the price.