Iron Market Update (November 29, 2012)

Iron ore prices continue to be volatile. They are now at around $117.90 per metric ton, down from a three-month high of $121.60 in early November, but still well above the $86.70 they hit in early September—a three-year low.

The latest pullback resulted from concerns that colder weather in China, the world’s largest iron ore consumer, could delay construction projects and cut iron ore demand. As well, China’s National Bureau of Statistics released data showing that the country’s steelmakers’ profits fell a combined 82 percent compared to a year earlier. (Ninety-five percent of annual iron ore production is used for steelmaking.)

Meanwhile in India, a recent e-auction for iron ore found no takers after the country’s steelmakers accused India’s biggest producer, NMDC, of keeping prices high despite international trends. As a result, some Indian steelmakers have curtailed their operations. “They’re killing us,” Suketu Shah, joint managing director of Mukund Steel, told The Economic Times.

NMDC denies the claim. The company’s acting chairman, CS Verma, said, “In October we reduced our rates by 3 to 11 percent, and in November we reduced them by another 2 to 11 percent. We have to be on par with market conditions and price our rates accordingly, which we do.”

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