Friday, October 13, 2017 5:00:08 AM
in Commodity News,Dry Bulk Market 13/10/2017
With spot Asian iron ore having fallen back below $60 a tonne, the price of the steelmaking ingredient appears to be heading toward a level more in line with supply and demand fundamentals.
However, as usual the risk when a rally reverses as quickly as the current decline in iron ore is that prices overshoot to the downside.
The Asian spot price fell to $59.65 a tonne on Wednesday, the lowest level in 3-1/2 months and a drop of 25 percent since the recent peak of $79.65 in late August.
Iron ore is now well below the $78.87 it fetched at the end of 2016, and it is proving to be a volatile year, with two strong rallies being followed by sharp reversals.
Both the surge to the 2017-high of $94.86 a tonne in late February and the August-peak were driven by optimism over robust steel output in China, which buys about two-thirds of global seaborne iron ore shipments.
The latest drop in iron ore prices has come as some of the optimism over Chinese steel production and demand fades, especially in the light of ongoing mill closures as part of efforts to improve air quality ahead of the major conference of the ruling Communist Party, which starts on Oct. 18.
While prices have been volatile, China’s import demand has been remarkably stable.
Imports for the first eight months of the year were 714 million tonnes, a gain of 6.7 percent from the same period last year, according to customs data.
While official numbers for September are yet to be released, vessel-tracking and port data compiled by Thomson Reuters suggest another steady month.
Seaborne iron ore imports were 87.2 million tonnes in September, slightly down from August’s 88.6 million, according to the data.
The vessel-tracking data and the customs numbers don’t tally exactly, given differences as to when cargoes are assessed as having been cleared. The ship data also doesn’t account for imports that arrive via rail or truck from countries such as Mongolia.
There is the risk that iron ore imports may be somewhat lower in the last quarter of this year, given the expected closure of steel mills and China’s ample port inventories, which rose to 133.8 million tonnes in the week to Oct. 6.
Inventories SH-TOT-IRONINV are lower than the record 141.4 million tonnes, reached in late June, but they are also well above the 114 million tonnes recorded at the end of 2016.
If iron ore demand is curtailed by curbs on steel production in the next few months, it should result in lower imports or a further build-up of port stocks, both of which should be bearish for prices.
POLLUTION CONTROLS
China’s Ministry of Environmental Protection released a plan in August that outlined pollution abatement measures in 28 northern cities from October to March, and reports suggest that shutdowns of steel mills and other heavy industries such as aluminium smelting have already commenced.
The enforced curbs on steel raise the possibility that sentiment toward iron ore will be hit, driving the price below the $53.36 a tonne low so far this year, reached on June 13.
However, the futures curve of Singapore Exchange contracts , which are based on the Steel Index spot price, has been flattening as prices have declined since the recent August-peak.
The curve usually trades in backwardation, with front-month contracts commanding a premium over those dated further out.
The premium of the front-month contract over the six-month was $2.58 at the close on Wednesday, down from $3.71 on Aug. 21, the day prior to the start of the current slide in prices.
While not a huge shift in the structure of the curve, it does illustrate that the market probably believes the current reversal in prices is unlikely to become a rout.
There may be some justification in that thinking, although much will depend on the tone and substance of the upcoming policy meeting of China’s rulers.
If it appears likely that the authorities will keep the infrastructure and construction spending pump primed in 2018, iron ore will likely get a boost along with other industrial commodities.
Certainly, China’s steel industry is still relatively bullish, with the industry association expecting demand to rise 3-4 percent this year, and output to rise from 808 million tonnes in 2016 to 840 million this year.
If this optimism is retained going into 2018, it may make any drop in spot iron ore prices below $50 a tonne short-lived.
Source: Reuters
Recent SHIP News
- Seanergy Maritime Announces the Date for the First Quarter Ended March 31, 2024 Financial Results, Conference Call and Webcast • GlobeNewswire Inc. • 05/09/2024 01:00:00 PM
- Seanergy Maritime Announces Availability of its 2023 Annual Report on Form 20-F • GlobeNewswire Inc. • 04/03/2024 08:05:00 PM
- Seanergy Maritime Reports Financial Results for the Fourth Quarter and Twelve Months Ended December 31, 2023 and Declares a Cash Dividend of $0.10 Per Share • GlobeNewswire Inc. • 03/15/2024 01:00:00 PM
- REMINDER - Leading Dry Bulk & Container Shipping Companies Participating at Capital Link’s 18th Annual International Shipping Forum Monday, March 11, 2024 in New York City • GlobeNewswire Inc. • 03/06/2024 02:00:00 PM
- Seanergy Maritime Announces the Date for the Fourth Quarter and Year Ended December 31, 2023 Financial Results, Conference Call and Webcast • GlobeNewswire Inc. • 03/05/2024 02:00:00 PM
- Form SC 13G/A - Statement of acquisition of beneficial ownership by individuals: [Amend] • Edgar (US Regulatory) • 02/14/2024 09:09:50 PM
- Leading Dry Bulk & Containers Shipping Companies Participating at Capital Link’s 18th Annual International Shipping Forum Monday March 11, 2024 in New York City • GlobeNewswire Inc. • 02/13/2024 04:27:51 PM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 01/31/2024 09:05:15 PM
- Seanergy Maritime Achieves Key Partnership with European Union Funding and Major Industry Stakeholders Under SAFeCRAFT to Revolutionize Maritime Propulsion for Existing Vessels • GlobeNewswire Inc. • 01/30/2024 01:30:00 PM
- Form SC 13D/A - General statement of acquisition of beneficial ownership: [Amend] • Edgar (US Regulatory) • 12/28/2023 10:15:14 PM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 12/15/2023 10:18:14 PM
- Form FWP - Filing under Securities Act Rules 163/433 of free writing prospectuses • Edgar (US Regulatory) • 12/14/2023 10:22:49 PM
- Seanergy Maritime Announces Share Capital Accretion Plan and Open Market Stock Purchases by the CEO • GlobeNewswire Inc. • 12/14/2023 10:09:38 PM
- Form 424B5 - Prospectus [Rule 424(b)(5)] • Edgar (US Regulatory) • 12/14/2023 10:00:51 PM
- Form 8-A12B/A - Registration of securities [Section 12(b)]: [Amend] • Edgar (US Regulatory) • 12/14/2023 11:12:20 AM
- Seanergy Maritime Releases its 2022 Environmental, Social and Governance Report • GlobeNewswire Inc. • 12/06/2023 04:35:00 PM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 12/05/2023 10:00:38 PM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 11/17/2023 09:30:31 PM
- Seanergy Maritime Reports Financial Results for the Third Quarter and Nine Months Ended September 30, 2023 and Declares Dividend of $0.025 Per Share • GlobeNewswire Inc. • 11/14/2023 02:00:00 PM
- Seanergy Maritime Announces the Date for the Third Quarter and Nine Months Ended September 30, 2023, Financial Results, Conference Call and Webcast • GlobeNewswire Inc. • 11/09/2023 02:00:00 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 10/27/2023 05:23:59 PM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 09/29/2023 08:34:36 PM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 08/09/2023 09:00:58 PM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 08/04/2023 08:30:31 PM
- Seanergy Maritime Reports Financial Results for the Second Quarter and Six Months Ended June 30, 2023 and Declares Dividend of $0.025 Per Share • GlobeNewswire Inc. • 08/02/2023 01:00:00 PM
Avant Technologies Equipping AI-Managed Data Center with High Performance Computing Systems • AVAI • May 10, 2024 8:00 AM
VAYK Discloses Strategic Conversation on Potential Acquisition of $4 Million Home Service Business • VAYK • May 9, 2024 9:00 AM
Bantec's Howco Awarded $4.19 Million Dollar U.S. Department of Defense Contract • BANT • May 8, 2024 10:00 AM
Element79 Gold Corp Successfully Closes Maverick Springs Option Agreement • ELEM • May 8, 2024 9:05 AM
Kona Gold Beverages, Inc. Achieves April Revenues Exceeding $586,000 • KGKG • May 8, 2024 8:30 AM
Epazz plans to spin off Galaxy Batteries Inc. • EPAZ • May 8, 2024 7:05 AM