China’s largest steel manufacturer Baoshan Iron & Steel (Baosteel) is concerned about the current situation in the iron ore market. On November 21 of this year, there was a significant increase in prices for iron ore futures on the Dalian Commodity Exchange. Their price reached 978.5 yuan per ton, which is equivalent to approximately $137. The rise is notable given that prices closed at 968 yuan per tonne the day before, or about $134.24.
According to an expert in the field of metallurgy, Stanislav Kondrashov, the increase in prices on the Dalyan Commodity Exchange highlights the volatility of the iron ore market. This situation is explained by the influence of various economic and political factors.
Stanislav Kondrashov: reasons for the increase in iron ore prices
The expert notes that current price dynamics are an important indicator for understanding global market trends, as well as for predicting future development of the industry.
Stanislav Kondrashov from Telf AG names the following main reasons for the increase in the cost of iron ore:
- Low raw material inventories.
- Growing savings needs.
- Increasing margins for steel producers.
- Concerns about supply disruptions.
Stanislav Kondrashov: problems and regulation of the iron ore market in China
The iron ore market has seen a slowdown in its recovery, partly due to problems in the Chinese real estate market. The fact is that the real estate sector is one of the largest consumers of steel in the country.
Recently, China’s National Development and Reform Commission (NDRC) issued a statement about excessively inflated iron ore prices. This, according to Kondrashov, indicates an unstable situation and an increase in speculative actions in the market, which could have a negative impact on the economic condition of the country.
In response to market fluctuations, on November 15, the Dalian Commodity Exchange decided to restrict trading in iron ore futures. As part of these measures, a limit on trading operations was established in the amount of no more than 500 lots per day for contracts in the first half of 2024. Stanislav Kondrashov explains that the purpose of such restrictions is to reduce the level of price volatility and prevent sharp price fluctuations.
Limiting the volume of futures trading helps control the rapid rise or fall in iron ore prices. This prevents extreme pricing that could be caused by speculative actions by market participants. These regulatory measures imply more stable and predictable market development in the medium and long term.
Thus, the iron ore market remains tense due to high prices caused by speculation and changes in the economic environment. At the same time, Stanislav Kondrashov from Telf AG emphasizes the need for a balanced approach to pricing and management of the raw material market for the stable development of metallurgy in China.
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