LAUNCESTON, Australia, Jan 23 (Reuters) – Spot iron ore prices in Asia appear to be poised on the precipice of a steep decline as a myriad of factors suggest an imminent correction. Except for one factor, which is probably enough to hold them up, at least for a little longer.
On the bearish side, port inventories SH-TOT-INV in top importer China are at a record high of 154.3 million tonnes, steel prices are starting to weaken as China’s vast property sector shows signs of easing growth, and supply from major exporters Australia and Brazil is expected to increase.
In theory these factors should be more than enough to start a slide in spot prices, but so far this hasn’t happened. Iron ore futures traded on the Singapore Exchange (SGX), which are based on the spot price for China cargoes, ended at $76.46 a tonne on Monday, up 7.3 percent since the end of last year and 31 percent since the 2017 low of $58.53 on Nov. 1.
China’s domestic iron ore benchmark futures ended Monday at 543 yuan ($84.84) a tonne, up 2.5 percent since the end of last year and 22.6 percent from their 2017 low in late October.
While both contracts are off highs reached earlier in January, the decline so far has been modest, and certainly not enough to claim the current uptrend has been reversed.