After a more than three -month lull of the world iron ore market in July, he confidently entered the growth trajectory. Futures for September on the Dalyansk exchange increased by 13.2% from the beginning of the month, exceeding 112/t, and August contracts in Singapore - by 10.6%, up to almost 103/t. According to the results of the week from July 18 to July 25, growth amounted to 2.4% and 2.3%, respectively. The main drivers were the expectations of state incentives in China and the announcement of strategic infrastructure projects. Crings on iron ore from the beginning of July increased by more than 10%
on July 18, the market encountered the first wave of caution after the statement of the Chinese Ministry of Industry about the intention to reform a number of key industries, including steel, with an accent to reduce the outstanding capacities. This caused a short -term correction in the spot and futures markets. However, even against the backdrop of such statements, iron ore remained supported by fundamental factors: a high level of loading of domain stoves and low port reserves.
the key catalyst for the market of China was the statement of the grandiose project of the construction of the HPP cascade on the Yarlung Zangpo River with a total capacity of 60 million kW. The project provides for investments over 1.2 trillion yuan and the creation of a new state enterprise for its implementation. The infrastructure sector immediately responded with a surge of optimism, which was transferred to the iron ore market: on July 21-22, the quotes increased by 3-4/tons, and the volume of transactions on the spot by hundreds of thousands of tons.
starting July 23, the market began to partially overestimate rapid growth. The statements of analysts about the possible speculative component in prices and the uncertainty regarding the practical implementation of reforms in the steel sector caused a slight correction. Despite this, production indicators remained positive: CISA recorded the growth in the production of steel and cast iron in mid -July, as well as the reduction of the stocks of reinforcement, which indicates the revitalization of final demand.
the iron ore market continues to fluctuate within a strong fundamental restoration and political uncertainty. In anticipation of the meeting of the Politburo in Beijing, traders show caution, fixing profit and overestimating the risks. However, a stable -high level of steel production and the real start of large infrastructure projects create the basis for further prices in August.
In the near future, everything will depend on how ambitious new state initiatives will be. If China confirms the course on stimulating the infrastructure - iron ore will have every reason to gain a foothold above 100/t and further.
Moody’s expects the price of iron
