China’s iron ore futures prices yesterday rose to a high five weeks, from the recent downtrend rebound, the reason is that the market expected Beijing to let the yuan depreciate the move will help to boost the world’s largest steel producer steel exports.
Another factor is that the port city of tianjin chemical explosion led to the suspension of imports of iron ore.
Dalian Commodity Exchange (Dalian Commodity Exchange) January delivery of iron ore futures rose nearly 4%, to 388.5 yuan/ton. Company according to The Steel Index (The Steel Index), China’s imports of iron content 62% rise in spot iron ore 40 cents, to $56.20 / ton.
Iron ore is the main ingredient in steelmaking, and BHP Billiton (BHP Billiton and Rio Tinto (Rio Tinto) and so on several major miners a key source of profits. Since early July 7 year low hit $44.10 / ton, in the past month in iron ore prices rose.
This week, China’s central bank has masterminded a the biggest drop since the mid – 1990 – yuan. Yuan depreciation will help steel exports, analysts said.
“If China continues to increase exports of steel, it will need to import more iron ore to make steel, iron ore may be net beneficiaries of depreciation, therefore,” brokers CLSA (CLSA) said, “even though it will be other countries in response to China’s exports and cutting steel production move partly offset.”
European steel industry organization, according to the Reuters news agency (Reuters) – European Union steel (‘ Eurofer) said yesterday, because now China’s steel export prices will be lower, the European steel companies could face “very real competition”.
According to JPMorgan chase (JPMorgan), China’s steel production capacity around 1.2 billion tons, is 3 times more than 10 years ago, from 2008, nearly double the capacity of scale.
Due to weak domestic demand, China’s steel production much into the global market. , according to the Chinese government wants to transfer part of the excess capacity to area all the way along the country and other emerging market countries.
China’s domestic iron ore prices significantly higher than that of overseas iron ore supply, this means that, even in the case of RMB devaluation, China is likely to have to continue to be dependent on sea market. Now China’s digest more than 70% of the world’s seaborne iron ore.
Tianjin chemical explosion and support for iron ore prices. Mining companies BHP said, tianjin port of shipping and port operations have been interrupted.