Spot iron ore market ambivalent during Spring Festival

Iron ore market has defied the customary pattern of cyclical swings, seasonality and holidays over the last 4 months. The climb of nearly USD 70 per tonne during the period is phenomenal by any yardstick given the undulations of the steel market both within and without China.

The run up is typified by ever elusive peak as each hike sets a new milestone and provokes prophesies which prove to be a misnomer with another climb. The tempo set by the ban on export from Karnataka has gathered speed with passage of weeks subsequently stoked by the devastating torrential rains in Australia and surge in domestic demand. Clamping on mining in Orissa, India and prolonged imbroglio over the legalities of mining perpetuated the spiral.

The domestic market in China has been on a steady course over the past 2 months accentuating the clamor for raw material to beat the hike despite record stock levels of over 80 million tonnes.

Piquantly the prices have remained escalating despite the absence of buyers. The USD 1 per tonne climb yesterday after a week’s gap has put to rest any thought of correction during the festival. It is learnt that traders are actively taking position as holiday buying is unusually active.

The current levels at USD 192 per tonne CNF, Chinese port has become a water mark wherein market is agog with anticipation of breaching the proverbial USD 200 per tonne mark after the holidays.

The final charge is dependent on plethora of factors unfolding after the holidays. The domestic market is certainly buoyant with re-bar prices having eclipsed the peak of 2009.

1. With slew of housing, infrastructure and rail project on the anvil demand looks effervescent.

2. Roar in international prices has catapulted Chinese mills into activity as their viability is alluring for nearby markets.

3. The cyclonic turbulence in Australia continues unabated. It is expected to regain normalcy not earlier than end of 2nd Qtr.