Iron ore prices under pressure in china (will steel soom follow?)
Spot iron ore pricing dropped 7.4 percent within the past 24 hours with 62% Fe iron ore fines hitting $63 per dry metric ton (dmt). Iron ore has dropped $15.80/dmt over the past month. On Aug. 22, 62% Fe fines were trading at $78.8/dmt, according to The Steel Index.
This morning, we received a note from one of our trading friends in China. He told us to expect iron ore to “continue a downward spiral unless something dramatic occurs. China ports still holding 140 million metric tons of ore.”
He told us, “Remember the song by Glenn Frey, The Heat is On? Price corrections are on a roll now. We had an offer of 1.8mm HRC for cold reduction at USD630/mt fob st lsd on Monday and it was basically the same price as Indian mills, but Indian mills included some 1.5mm at same price. Today, we have cold rolled "soft" (Al-Killed) in 1.00mm at USD630/mt fob st lsd. The dilemma is that HRC has not budged downwards yet to adjust to the lower CRC prices. Will see in coming days if there's HRC movement and let you know.
All steel products are under pressure now, John, and we think the bubble is about to burst.”
If Chinese prices are indeed in a “bubble” that is soon to deflate, then the upward pressure on foreign steel prices will be lessened and potentially U.S. prices could come off as we head into late fourth-quarter lead times.