On Tuesday, iron ore prices displayed a distinct contrast as they rose in Singapore but dipped in the crucial Chinese market of Dalian. This shift in pricing dynamics is likely to impact sentiments surrounding major exporters like BHP (ASX:BHP), Rio Tinto (ASX:RIO), Fortescue (ASX:FMG), and Mineral Resources (ASX:MIN), who play significant roles in the iron ore trade.
The price of April 62% Fe iron ore fines on the SGX in Singapore closed at $US109.15 per tonne on Tuesday evening, showing a slight uptick from Monday’s figure of $US107.25. However, this price still remains relatively low, hovering around multi-month lows. Reuters attributed the increase in SGX futures prices to speculation regarding potential rate cuts in the United States, diverging from the subdued demand witnessed within the Chinese economy.
In contrast, the Dalian exchange in China experienced a downturn, with the most active iron ore contract for May 2024 delivery hitting a five-month low. This decline was driven by weak sentiment and decreased demand from struggling steel companies facing production challenges.
China's recent National People's Congress meeting did little to alleviate concerns surrounding the property market, contributing to a sluggish start to the construction season and dampening steel demand. Moody's withdrawal of its 'Baa3' rating for Vanke 2202.HK, along with the assignment of a 'Ba1' corporate family rating (CFR), underscored the prevailing apprehensions.
This lack of positive indicators has led steelmakers to exercise caution in restocking ore, particularly in light of subdued downstream demand. Traders have observed an increase in stocks of steel products like rebar, with portside iron ore stocks surpassing 141 million tonnes. Notably, the MySteel website reported a sluggish rise in apparent rebar consumption post-CNY breaks, exacerbating financial strains on steelmakers and necessitating furnace idling for maintenance.
As iron ore prices fluctuate, investors and industry stakeholders closely monitor the intricate interplay between global economic factors and regional market dynamics.
