Friday, 10 March 2023

Monsters of Rock: Iron ore fundamentals improving in March, say MySteel

by Berkeley Lovelace

Iron ore miners are on the outer today with Fortescue (ASX:FMG), BHP (ASX:BHP) and Rio Tinto (ASX:RIO) all in the red.

A bit is going on.

The Two Sessions meeting of China’s top brass the other day was generally disappointing for commodities.

An economic growth target of 5% was lower than commentators were expecting and the expectation of a major recovery in China’s property sector has been doused.

That will mean less steel demand in the world’s biggest steel market, key for iron ore prices, than many were expecting.

But analysts at the coal face say the short-term fundamentals for iron ore are positive.

We are looking at iron ore exports from Australia and Brazil falling due to wet weather at the same time as portside stocks begin their draw down on the start of China’s major construction season.

“The fundamentals of China’s iron ore market are likely to improve this month, leading to a further decline in portside iron ore stocks, according to Mysteel’s monthly report.
During March, imported iron ore supply will remain in a seasonal low as iron ore deliveries from Australia and Brazil may be further affected by weather events, the report suggested,” MySteel’s Lea Li said.

“During February, China’s 45 major ports under Mysteel’s survey received a total of 91.3 million tonnes of iron ore, falling by 7% on month.

“As for iron ore demand, the report pointed out that steelmakers will need to lift their ore replenishment volumes this month, to feed blast furnaces in the process of being brought back online.

“Daily hot metal output among the 247 Chinese steel mills under Mysteel’s tracking has been growing since mid-January and by March 2 had reached 2.34 million tonnes/day, 3% higher on month, the latest survey showed.

“Average output may rise to around 2.37 million t/d this month, as reported.”



But other matters, like a recent warning from the National Development and Reform Commission about ‘price speculation’, code for ‘lower these prices or else’ have hampered market sentiment.

Portside stocks in China fell 2.2Mt or 1.6% to 140Mt in the week to March 2, MySteel said, the first fall in five weeks.

Singapore prices fell 1.1% to US$125.45/t today, still high by historic standards and more than 50% higher than lows of under US$80/t recorded in October last year.

Elsewhere coal and lithium producers had a field day, with Whitehaven Coal (ASX:WHC) rebounding from its lowest price since August on a 5.55% gain and Yancoal (ASX:YAL) up 5.39%.

Pilbara Minerals (ASX:PLS) shares rose 4.39% with Mineral Resources (ASX:MIN), IGO (ASX:IGO) and Allkem (ASX:AKE) all among the day’s top large cap performers.

Coal and batteries were the themes in the mid-tier as well, with Sayona (ASX:SYA), New Hope (ASX:NHC), Arafura (ASX:ARU), Liontown (ASX:LTR) and Nickel Industries (ASX:NIC) all gaining despite the iron ore majors leading materials to a 0.88% loss.


Monstars share price today:



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