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Week 47 21 Nov 2017
Last week, all eyes in the global steel markets were pointed at China, where the announced measures to restrict output during the winter season have begun to be implemented. The local authorities have decided to put restrictions on output by certain mills in order to control pollution levels during the cold months.
Market observers have been having some difficulty predicting whether the restrictions would bring a recovery in finished steel prices or mainly hit iron ore prices due to possible lower demand. During the first week of these restrictions having taken effect, the market has responded with iron ore prices stabilising at a level not seen since the 6 November. Finished steel products’ prices in China meanwhile have slightly increased.
Week 46 14 Nov 2017
Sentiment within global iron and steel remains generally firm as markets turn their attention towards the next quarter and the coming year.
With myriad signals and economic indicators being generated almost as prolifically as its steel, the mood in China’s domestic iron and steel market remains solid. And as we poke the final embers of 2017’s fire, the seaborne iron ore price – despite the recent slide from its early summer heights – remains stubbornly over $60/tonne.
The looming winter production restrictions for both Chinese steel and coke production are doubtless supporting steel demand, at least for the present. And a clear sign that domestic demand remains relatively healthy, Chinese steel exports remain depressed.
At least the Chinese government appears to be able to make decisions, whether on production restrictions or illegal steelmaking capacity removal and – most importantly - follow them through. This is something of which the European Union authorities can rarely be accused.
The EU has been hammering its steelmakers on reducing emissions and steelmaking capacity for long enough. As soon as the sector attempts to rationalise, by means of a major acquisition and a merger, then the naysayers resurface. Last week the European Commission registered its first public unease over the ArcelorMittal-led takeover of Italy’s troubled steel behemoth Ilva, citing monopoly concerns.
45 07 Nov 2017
Last week the iron ore price reached its lowest point since the end of June, falling below $60/tonne cfr Qingdao and getting closer to 2017’s low of $53.49/t cfr Qingdao registered in mid-June. The latest correction came after the price had been ranging at $60-65/t cfr since the end of September. This new correction raised some concerns among market participants globally but the price then recovered somewhat toward the end of the week.
This indicated that the market is not collapsing but only moving downwards slightly as Chinese mills apply output reductions because of environmental legislation for the winter.
Week 44 31 Oct 2017
Last week the global indicators for ferrous raw material prices remained fairly stable in their range, continuing the trend initiated 10 October.
Scrap prices in Turkey remained stable again at $300-310/t CFR Turkey for HMS 1/2 (80:20). This is some $50/t below this year’s peak back during the summer, but some $90/t above the level registered at the end of October, indicating that the market remains fairly strong despite the correction seen since September.
Iron ore prices continued to be range-bound at $60-65/t CFR China for 62% Fe, as they have been since the end of last month. Last week the market was relatively weak toward the end, but an outlook remains difficult going forward. Further corrections could be expected, taking the price below the $60/t CFR. Last week nevertheless French Bank BNP Paribas maintained its outlook for an average of $68/t CFR for iron ore in January, in contrast with other analysts’ views expecting a volatile short term and lower iron ore prices into 2018.
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