Reasons for the increase in iron ore prices:
1. Improvement in demand for Australian Iron ore: Australian medium-grade iron ore consumption has increased due to cost-effective measure but still few mills in China are purchasing Brazilian iron ore (Carajas fines) owing to the better grade.
2. Northern China unveiled further Production cuts-: China is imposed strict govt. regulation for appeasing environment-related issues; in that process, they have further imposed production cuts in Tangshan (Northern China). Last week China’s top steel-making city, Tangshan in Hebei province ordering steel mills, coke producers, and utilities to cut output in the summer season. It moves to deepen the cut will last for six weeks from 20 Jul’18 to31 Aug’18. These production cuts will be in addition to the winter production curbs of 10-15% imposed from Mar-Nov’18. Mills expect steel prices to remain firm resulting in stable demand for ore.
3. Declining Iron ore inventory at Chinese ports-: Iron ore inventory at Chinese major ports as on 20th Jul’18 fell by 0.4MnT to 155.78 MnT against 156.18 MnT a week ago on 13th Jul’18 as per data provided by SteelHome.
4. Depreciating Chinese currency-: China’s currency Yuan slumped to the one-year low against the US dollar and hit 6.8 on Friday (20th July`18).
