BEIJING, Dec 19: Iron ore prices inched up overnight to halt a nine-day slide, amid buying interest from Chinese customers looking to restock, but a sustained recovery remained unlikely, traders said. Buyers in China, the world’s biggest steelmaking country, remain cautious, and freight rates now at five-year lows also point to weak Chinese demand, ANZ Bank said in a note. ‘Chinese steel mills are wary in the wake of new U.S. anti-dumping measures against wire-rod imports and expected cuts to China’s tax rebate for boron-added steel exports,’ it said.
Benchmark 62 percent grade iron ore for immediate delivery to China rose 0.15 percent overnight to $68 a tonne after hitting a five and a half year low the previous day, according to data from the Steel Index. ‘It is winter and there isn’t going to be any big improvement before Chinese new year – I also think the market is waiting for fresh policies right now,’ said a manager at a commodities trading company in Beijing. Amendments to China’s environmental law will go into effect from Jan. 1, and it could help drive smaller players out of the market and reduce overcapacity, the main driver of low prices.
Analysts with GTXH.com, an online steel trading platform, said it could cost small and polluting steel plants as much as 90-110 billion yuan to renovate their equipment in order to comply with tough new standards.
Much of the impact will be felt in Hebei province, China’s top steel producing region and home to hundreds of small, privately owned mills, where pollution emission and waste water fees are set to be doubled at the beginning of the new year.
Steel rebar futures in Shanghai edged up 0.95 percent on Friday morning, ending the session at 2,562 yuan ($412) per tonne. Dalian iron ore futures rose 0.4 percent to 489 yuan per tonne.
(AGENCIES)
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