Iron ore levels have remained unchanged in week 26 dousing expectations of gradual increase. Surprisingly it remained dormant at USD 139 per tonne level for the entire week when the finished steel prices wilted by almost 1%.
A renewed slide in both long and flat product prices during the week as surmounting inventory by errant mills in China exerted on the market levels.
Even Shanghai Futures dipped by 0.2% during the week.
There was lack of new tenders with few traders moving down offer levels by USD 2 per tonne clinch deals without any success. Mills became reticent on buying. Iron ore stockpile at Chinese port increase by 0.95 million tonnes w-o-w touching 96.81 million tonnes signifying lack of consumption which will certainly slow further buying.
Moreover with the pressure building up on the mills to prune production to align with the demand realities rather than blindly pursue production to disaster will certainly tighten the noose on iron ore market. Steel industry profit in Jan-May slumped by 56.9% from the same period last year.
China Iron and Steel Association estimated that China’s daily crude steel output hit 1.97mln tonnes in mid Jun, down by 1.4% from the previous 10 days.
EU crisis still in dilemma chances of revival remained ever so bleak. The flip flop trajectory of market will not see significant appreciation in iron ore prices in 2012.
Correction by USD 1 per tonne to USD 2 per tonne next week is likely. Vibration within band of USD 135 per tonne to USD 140 per tonne seems feasible unless a miracle happens till Q4.
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