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Iron Ore Surges Into Bull Market as Mills Come Off the Sidelines

  • Monday, July 3, 2017
  • Source:ferro-alloys.com

  • Keywords:Iron Ore
[Fellow][ferro-alloys.com] Iron ore’s bear market lasted all but three months. The raw material has rallied back into bull-market territory right at the end of the first half on a surge driven by mills in China boosting purchases to replenish inventories, with higher...

[ferro-alloys.com] Iron ore’s bear market lasted all but three months. The raw material has rallied back into bull-market territory right at the end of the first half on a surge driven by mills in China boosting purchases to replenish inventories, with higher-grade ore in demand.

Ore with 62 percent content delivered to Qingdao rose 3.8 percent to $64.71 a dry metric ton on Thursday, the highest since May 4, according to Metal Bulletin Ltd. Prices have gained more than 20 percent from the year-low of $53.36 hit just two-and-a-half weeks ago, meeting the common bull-market definition. On Friday, the price rose 0.3 percent to $64.95.

“The pickup in physical tenders suggests a real tightness,” Daniel Gradwell, a senior economist at Australia & New Zealand Banking Group Ltd., said in a note. Earlier this week, the bank said trading activity had increased as buyers re-entered the spot market after a prolonged period on the sidelines.

Iron’s advance, which pared a quarterly loss, spurred the commodity’s biggest monthly climb since October in a boost for miners including Rio Tinto Group. While the rally has been accompanied by gains in steel, with mills’ margins seen as robust, the uptick has come even as some banks expect further weakness given rising supply. Goldman Sachs Group Inc. says the price is heading lower and Citigroup Inc. forecasts a slump back to the $40s.

“Steel companies are actively boosting purchases to rebuild ore inventories held at the mills,” said Xu Huimin, an analyst at Huatai Futures Co. in Shanghai, adding that they’d previously refrained from buying as prices sank.

  • [Editor:Wang Linyan]

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