Iron ore stabilised in trade this week after crashing more than 35% in a little under two months.
Since hitting a high of $US94.86 per tonne on 21 February, spot prices for benchmark 62% fines plummeted to $US61.60 on 19 April.
The fall was predicated on concerns about fundamentals, with lower steel demand and high iron ore inventory buildup at Chinese ports.
Speculation also no doubt played a part, as traders bid up the price on the Dalian Commodities Exchange before rapidly unwinding positions.
This chart illustrates the recent collapse:
Prices finally found support back to the mid-$60 range, and since 25 April there’s been only one daily price fluctuation of more than 1%. Spot prices for benchmark 62% fines closed last night at $US68.68.
Metal Bulletin reports that steel production in China continued to grow in April. As a key component in steel manufacturing, iron ore is closely correlated to movements in spot rebar prices.
“Member mills of the China Iron & Steel Assn (Cisa) produced crude steel at an average rate of 1.8471 million tons per day during the second ten days of April, up 2% from 1.8104 million tons per day over the preceding ten days,” Metal Bulletin said.
While iron ore prices seem to have found a floor for the time being, concerns remain about the outlook as China’s latest manufacturing PMI data showed that growth slowed noticeably and almost contracted.
Analysts at Macquarie recently suggested that the price fall isn’t over yet, and predicted that prices will move closer to the $US50 per tonne range.