Supply-side pressure mounts over raw material prices

By Alistair Ramsay / June 13, 2017 / www.metalbulletin.com / Article Link

Bullishness in the iron ore prices seen during the start of the year has been replaced with greater volatility as supply outpaces demand.

Chinese state-directed infrastructure spending and a strong construction market effectively drove bullish sentiment in the first quarter of 2017, fuelling steel production and iron ore consumption. However, with the steel run rates slowing down as the China Iron and Steel Association has predicted output to drop by 2% to around 800 Mt in 2017, this is likely to pull down iron ore consumption rates while restricting growth in imports, which had again grown more quickly than demand until April's month-month and also year-on-year fall. The result has been an increase in inventories with China's 42 major ports holding stocks at multi-year highs of 136 Mt in late May, putting downwards pressure on prices. However, the pessimism over iron ore prices, is likely to be countered by the recent uptick in rebar prices, the...

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