Rainfall in Australia limits the supply for iron ore to its consumers worldwide
Spot iron ore prices hit a two-month high on Tuesday, July 16, 2013, and increased by 1.7% to US$ 129/MT which was the highest since May 13. It is likely to witness further gains on Wednesday, July 17, 2013, with the steel prices remaining firm which will encourage the traders to buy raw material. Along with it the availability of sport cargoes are also limited which will further encourage the purchases of the raw material.
China is the largest importer of Iron ore in the world. Its import rates had declined by around 20% in the first half of 2013 which has again witnessed a rise of 11% at present.
The largest supplier of iron ore, Australia is currently not able to supply the required amount of iron ore to its consumers due to heavy rainfall. This causes limited availability of cargoes of iron ore for china, which further helps the traders to increase iron ore prices in the market.
Meanwhile, BHP Billiton, the world’s 3rd largest iron ore producer says that its output has hit a record of 187 MnTPA until June-end. Also, their iron ore mines expansion project in Australia is running much ahead than the planned schedule. Regardless of the risk that China might limit its demand for the raw material owing to its slow economy; miners like BHP are keeping their outputs at a higher level.
China’s average daily output of crude steel has decreased to 2.1 MnT in the first 10 days of July, 2013, from 2.2 MnT in the previous 10-day period.