·
Experts see renewed demand
for steel as China reopens cities.
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Easing COVID-19 restrictions
could send Iron ore as high as $150 per ton in by June 2023: Citigroup.
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China is reportedly picking
up large volumes of low-grade Indian iron ore in the coming weeks.
Via AG Metal Miner
China’s
steady easing of covid-19 restrictions finally allowed the beleaguered economy
to begin reopening. Many experts expect a renewed demand for steel, which means
an increased appetite for steel-making raw materials such as iron ore. Both
analysts and traders believe the lifting the restrictions was a step in the
right direction. This current positivity is clear in the price of iron ore
futures, which have started climbing once again.
Ore
futures rose this Monday after more cities in China eased their covid
restrictions. According to one report, Citi Group believes that the gradual reopening of the economy
could propel iron ore prices as high as $150 a ton by June 2023.
In
the past month, iron ore prices have enjoyed a significant rise and fresh
advancements. According to the report, this prompted Citi to upgrade its
forecast for Australia’s top export. The organization also projects that iron
ore will reach $120 on a three-month horizon, from its previous price of $110.
However, if China initiates even more credit easing up measures, Citi
claims ore prices could rally towards $150 a ton in the next three to six months.
India Set to Benefit From China’s Initiatives
China’s
sudden motivation is also good news for neighboring India. A few days ago, the
Indian government withdrew an export duty on iron ore lumps and fines of less
than 58% Fe. Back in May, the government levied export charges varying from 15%
for steel exports to around 50% iron ore (including concentrates), which no
doubt impacted iron ore futures. Steel prices in domestic markets have
been falling ever since.
Now,
reports emerging in India reference China picking up large volumes of low-grade
Indian iron ore in the coming weeks. This is largely due to Chinese steelmakers
seeking cheaper raw materials to cope with meager profits.
A
report in The Hindu Businessline detailed that traders and
analysts were looking to resume buying from India after six months of
suspension. In fact, one subset of traders believed that there was still room
for prices and iron ore futures to rise. They cited demand for low-grade iron
ore fines and pellets, which has received support from steelmakers’ incentives
to bring down costs.