Column: Mixed signals for China steel and iron ore point to prices drifting lower – by Clyde Russell (Reuters U.K. – March 12, 2019)

https://uk.reuters.com/

LAUNCESTON, Australia (Reuters) – China’s steel and iron ore markets are currently crowded with an overload of information, much of it seemingly pulling prices in opposing directions.

The steel market is having to weigh news of extended output restrictions as part of ongoing efforts by Beijing to lower air pollution, weak vehicle sales, slower economic growth and uncertainty over the trade dispute with the United States.

If that sounds negative for prices, consider the upcoming peak-demand season as winter ends and construction projects kick off, increased stimulus spending on infrastructure and the view that lower output may support a supply-driven price increase.

For iron ore there is the ongoing challenge to work out whether the terrible tailings dam disaster in January at a mine operated by Brazil’s Vale will actually cut exports by enough to make a difference. And if it does make a difference, will it also have an effect on high-grade versus low-grade iron ore demand?

The market also needs to reconcile the increase in port stockpiles of iron ore, even though shipments from Port Hedland, the main export harbour in top producer Australia, actually fell in February.

For the rest of this article: https://uk.reuters.com/article/uk-column-russell-ironore-china/column-mixed-signals-for-china-steel-and-iron-ore-point-to-prices-drifting-lower-idUKKBN1QT1A9

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