Even though global steelmakers make up about 40% - 60% of their production capacity, steelmakers in those countries are gradually booking scrap at higher prices. Therefore, iron ore prices have risen in the last one week due to supply shortages. Compared to the same period in 2019, steel exports from Turkey to China increased by 74.9 percent from January to May 2020, the report said. China's steel imports from India have increased by 60 per cent to 440,000 tonnes this year compared to the previous year.
What is iron ore and why does China demand more?
The primary use of iron ore is in the production of iron. Most of the iron produced is then used to make steel. Iron ore is the raw material used to make pig iron, one of the main raw materials for making steel. The mined iron ore is used to make 98% of steel.
Chinese iron ore futures stretched on Thursday, sending spot prices up 11 months as mills bought steelmaking material to fill inventory in hopes of strong demand in the coming months. Strong demand continues to feed the market in the mid of favorable view over China's economic growth recovery, the commodity strategists at ANZ wrote in a note.
India’s Iron ore Shortage:
According to a report, the Ministry of Steel has taken steps to prevent disruptions in iron ore supply and reduce India's imports to selected countries for coking coal, the raw material for making steel. In its annual report for the financial year 2019-20, the steel industry faces challenges in the short term as well as in the long run in terms of raw material safety. A report says that the ministry of steel is working hard for the safety of raw materials for this sector. Iron ore and coking coal are the two main raw materials used in the manufacture of steel. “As of March 31, 2020, about 37 working commercial mines (250+ mines in total) have expired, which is expected to disrupt the supply of 45-50 million tonnes (MT) of iron ore by 2020-21.
Steel exports from Turkey to China rose 74.9 percent from January to May 2019 to more than $ 6.1 million compared to the same period in 2019, the Turkish Ministry of Trade told Trend. The Turkish steelmaker did not rush to buy deep sea scrap due to weak demand in the local and export markets. However, in the wake of strong Chinese prices for iron ore and steel, Turkish steelmakers are booking deep-sea scrap at a gradually higher price per week. Purchases of Baltic Sea cargo for Turkey increased by $ 13 and ended on July 22, 2020 at 3,273 per tonne.
UK’s Steel Market
The Intermediate Merchant Spot Market for Light Iron Scrap in the UK moved unchanged from June 12 during the week ending Friday, July 12th. The scrap generation did not return to the UK until the introduction of lockdown measures to contain the spread of the Covid-19 pandemic in March. As a result, there has been a drop in scrap emergence from vehicle and white goods disassembly and a drop in the number of demolition projects. UK HMS 1&2 Price improves $5to Indian port at $255/MT CFR.
Steel Export from US to Turkey
US East Coast market activity increased after the new sale to Turkey. Ferrous scrap exports increased by 18% M-o-M in May 2020. Turkey is the largest buyer from the United States. The HMS 1 & 2 export price from the US to Turkey increased by $10 and closed at $268 CFR last week.
If iron ore prices continue to gain momentum in the coming days, some more price revisions can be expected
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