Iron Ore Prices Show Signs of a Rebound in Price...

Industry News

& Articles

Iron Ore Prices Show Signs Of Rebound

Facebooktwitterlinkedin

Iron ore prices see potential rebound in price, following anticipated improvement to Chinese steelmaking production volumes.

  • Chinese steel producers seen to restock iron ore supplies for Winter
  • May 2021 iron ore prices at highs of US $229.5 per tonne
  • Recent iron ore price lows of US $84.61 per tonne

Global iron ore prices have seen an incredible dip from highs of US $229.5 per tonne in May this year, influenced in most part by steelmaking legislation from Beijing. Externally, a global push towards industrial decarbonisation also factors into the cooling of demand for Chinese steel manufacturing, as well as for its associated ingredients which primarily include iron ore. While the dip in iron ore prices have continued its plunge since May, recent lows of US $84.61 per tonne display an indication of a possible rebound in price, with expectations of improving demand for steel production to come.

The iron ore price climb to peaks of US $200 per tonne earlier in the first half of 2021 can be attributed to a correlating surge in demand for Chinese steel production. Speculators and analysts have cited this period of increased construction activity as a hedge against negative pandemic economic effects upon the Chinese economy. While this certainly drove the iron ore price to monumental highs, geopolitical and domestic policy developments soon triggered its eventual freefall from 19 July.

The wider global incentive towards industrial decarbonisation plays a factor into part of Beijing’s decision making surrounding its cooling of domestic steel production. Beijing’s leadership seeks to provide ‘Olympic blue skies’ for athletes and attendees during the upcoming Beijing Winter Olympics in February 2022, and seeks to achieve this by curbing Chinese industrial steel output. Additionally, still-ongoing geo-political tensions involving Australia have resulted in China’s unofficial ban on Australian coal imports — a move which has lately proved ineffective, especially with reports of Chinese ports quietly unloading dockside stockpiles of coal from Australian vessels.

In the latest development to this tumultuous relationship involving the two countries, news of a looking energy crunch ahead of Winter, and speculations of increased steel production activity after the Winter Olympics lead speculators to believe a rebound to iron ore prices could be underway.

Iron Ore Prices Return to the US $100 Mark

Despite strict steel production curbs imposed domestically throughout this year, market experts note recent price activity as a sign of improving demand for Chinese steel production. Reaching highs of US $100 this week, market sources attribute this price activity to growing demand for steel products such as rebar, wire rod and hot-rolled coils. A quick look at Australian iron ore producer BHP Group Limited’s (ASX:BHP) performance over the last 5 days reveals a similar price movement, with its share price up 0.61 per cent. Impressively, this improved demand for iron ore gains traction despite ongoing defaulting concerns associated with prominent Chinese property developers.

While news of potential defaults by Evergrande China and associated development businesses have applied continued pressure on iron ore and steel prices, Chinese steel mills are expected to increase their production volumes just before the start of 2022. Beijing’s mandate to keep the skies blue and air fresh over the Winter Olympic event is expected to remain in place, yet it remains to be seen what effect these curbs will continue to have, long after the last athletes have departed from the country. As Chinese steelmakers begin to restock their iron ore supplies for winter, all that remains is a significant market catalyst to boost the iron ore price further up into 2022.

Louis Mosmann

Louis Mosmann is a Private Wealth Client and Research Assistant at KOSEC- Kodari Securities. Louis covers macroeconomic events, global markets and ASX300 company announcements, allowing clients to make more informed investment decisions. Email Louis at l.mosmann@kosec.com.au.

Comment on this company

Latest Stories

Fisher & Paykel Healthcare Revenue Down

Fisher & Paykel Healthcare Revenue Down……

Harvey Norman, Lockdown Restrictions Reduce Sales

Lockdown restrictions reduce sales by 8.8 per cent… …

NIB Holdings Limited Adds Kiwi Insurance And Telehealth Investment

NIB Holdings Limited (ASX:NHF) announces $4 million investment……

More for you

Northern Star Resources Limited Announces Kalgoorlie Power Plant Acquisition

Northern Star Resources Limited Announces Kalgoorlie Power Plant Acquisition……

Link Administration Holdings Limited Manages Strong Acquisition Interests Ahead Of 2H22 Results

Link Administration Holdings Limited Manages Strong Acquisition Interests Ahead Of 2H22 Results……

WiseTech Global Looks To Capitalise On Global Supply Chain Congestion

WiseTech Global Looks To Capitalise On Global Supply Chain Congestion……

Accent Group Limited Plots Ambitious Steps Towards Retail Expansion

Accent Group Limited Plots Ambitious Steps Towards Retail Expansion……

Sonic Healthcare Significantly High COVID-19 Test Volume

Significantly high COVID-19 test volume……

Aristocrat Leisure Rakes In Strong Earnings With FY21 Report

Aristocrat Leisure Limited has today published its FY21, highlighting……

KOSEC Terms & Conditions

Kodari Securities Pty Ltd (CAR 399556) trading as KOSEC is regulated by the Australian Securities and Investment Commission (ASIC). KOSEC is a financial services company and any information provided by its platforms, portals, reports and documents is protected by copyright. Any unauthorised production of this information is prohibited.
KOSEC reserves the right to change or remove any information provided on our website, reports or any documents including these terms and conditions at any time without notice. The change or modification to the terms and conditions will be effective immediately upon posting an updated version on our website, necessary platforms and documents. It is recommended that you review the information provided on our website, including these terms and conditions frequently for any changes.

Disclaimer
KOSEC provides general advice only. The information provided is of a general nature only and does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon, or treated as a substitute for specific professional advice. KOSEC recommends that you obtain your own independent professional advice before making any decision in relation to your particular requirements or circumstances. Please make sure you read our Financial Services Guide (FSG).

KOSEC does not guarantee any returns. Past performance of any product discussed is not indicative of future performance. (We urge that caution should be exercised in assessing past performance. All financial products are subject to market forces and unpredictable events that may adversely affect their future performance). Investing in the stock market can incur huge losses. Please also be aware that fees will incur on every transaction regardless of the performance of your investments or returns generated. Employees and or associates of KOSEC may hold one or more of the stocks, securities or investments reviewed by the company.

Your use of information from our website, reports, documents and from talking to our representatives/associates is at your risk. Under no circumstance should the investment be based solely on KOSEC information and general advice. You should seek professional financial planning advice.
KOSEC aims to maintain the accuracy of the data and information provided on this website, by using information prepared from a wide variety of sources, which KOSEC to the best of its knowledge and belief, considers accurate and does not make any representations or warranties of any kind, expressed or implied, about the completeness, accuracy, reliability, suitability or availability of the information provided.

We may at times refer to third parties, which the details of these third parties have been provided solely for you to obtain further information about other relevant products and entities in the market. KOSEC has no control over the information third parties have, or the products or services offered, and therefore make no representations regarding the accuracy or suitability of such information, products or services. You are advised to make your own enquiries in relation to third parties. Our inclusion of any third party content is not an endorsement of that content or the third party.

Fees
As a client you will be charged a yearly service fee and a set brokerage fee per transaction. Your service fee will automatically renew at the end of your agreed 12 month period at the same rate advertised at the time. Your credit card or bank account will be charged for a further year following which will again auto renew until you cancel your yearly service fee. You can cancel the auto renewal at any time in advance of the renewal date by contacting us. KOSEC is aware of the need to ensure the security of your credit card details and our payment systems are compliant with the Payment Card Industry (PCI) Data Security Standard.

Privacy
You consent to receiving email correspondence from KOSEC, as well as companies KOSEC has an association with. These emails will be sent by KOSEC and third party companies. You can opt out of receiving any category of emails at any time by contacting us. We may from time to time inform you of special offers, or even ask your opinion of the services we provide, but your involvement is optional. Should you request us to do so, we will archive your details.

Indemnity and Liability
You indemnify KOSEC from all claims or threatened claims, suits, demands, damages, costs as well as including legal costs incurred in dealing with any threatened claim, expenses made by any person or corporation against KOSEC and any other amounts which is caused by KOSEC providing information, execution and General Advice.

You hold KOSEC harmless and release it from any liability in respect of any loss, harm or damage arising from a decision made by you on the basis of information obtained through the use of our portal, reports, documents or any General Advice given and any transaction taken place.

You hold KOSEC harmless and release it from any liability in respect of any loss, harm or damage arising from delays in executing orders for the client and acknowledges KOSEC makes no guarantees about the time taken to execute an order on behalf of the client. You acknowledge that KOSEC relies on third parties in providing technology and release KOSEC from any harm, loss or damage you may suffer as a result of the failure of such information technology.

Cookies and Links
KOSEC website, and its portal uses cookies, which lets us identify your browser while you are using the site or our portal. Cookies do not identify you personally. They simply allow us to track your usage patterns. If you prefer not to receive cookies, you can configure your browser to reject them or to notify you when they are being used. The functionality of the KOSEC website may be impacted if you restrict the use of cookies.

Fill up the form below and we will get back to you as soon as possible.

CLAIM YOUR FREE E-BOOK &
7 DAY ACCESS TO LOTUS BLUE

STOCK MARKET SUCCESS

KOSEC’s CEO, Michael Kodari’s new book, “Stock Market Success” valued at $39.95, available at Dymocks book stores with all the proceeds going to Dymocks Children’s Charities.

CLAIM YOUR FREE E-BOOK WHEN YOU LOGIN TO LOTUS BLUE INVESTMENT PORTAL

Latest TV Commercial