Wednesday 17 July 2019 ,
Wednesday 17 July 2019 ,
Latest News
  • 73.93 pc pass HSC, equivalent examinations; 47,286 students secure GPA 5
  • Armed forces ready to help: Army Chief
  • DU students demand ending affiliation with 7 colleges
  • Anti-mosquito drive from July 25: LGRD Minister
  • HSC results acceptable, good: PM
14 March, 2016 00:00 00 AM
Print
China’s next bubble

Iron ore surges as speculators weigh in

AFP
Iron ore surges as 
speculators weigh in
The file photo shows Chinese workers loading steel onto a truck at a steel market in Yichang, central China’s Hubei province. With a huge global steel glut and slowing demand in China, an enormous recent spike in the price of iron ore has left analysts confused. AFP photo

AFP, SHANGHAI:  With a huge global steel glut and slowing demand in China, an enormous recent spike in the price of iron ore has left analysts scratching their heads, with some even claiming a flower show might be to blame.
But observers say the extraordinary movements for one of the world’s basic bulk commodities have been fuelled by something far more prosaic than daisies and daffodils—simple speculation.
The spot price for iron ore—the key material for steel—jumped 20 per cent on the Dalian Commodity Exchange on Monday.
It closed at $57.35 per tonne on Friday, up nearly 33 per cent so far this year.
But the vast majority of trades on the exchange do not reflect real-world transactions: the iron ore futures volume on Wednesday alone represented an underlying 978 million tonnes of the commodity—more than China’s entire imports last year.
“Steel prices are in a crazy phase now. Everyone’s emotions are high and pushing up prices is the norm,” Chen Bingkun, an analyst at Minmetals and Jingyi Futures, told AFP. “The price rise is also caused by speculation.”
Only part of the real global iron ore trade passes through exchanges such as Dalian or Singapore, the other main hub for derivatives based on the commodity.
Instead, the business is dominated by a small group of producers, including Anglo-Australian giants Rio Tinto and BHP Billiton, Brazil’s Vale and Fortescue Metals of Australia.
They all compete to sell to steelmakers in China and elsewhere on longer-term contracts, often priced according to indices calculated by specialist trade publications, leaving limited liquidity for the spot market and heightening its volatility.
Chinese analysts and industry officials have cited a mix of factors driving the speculation that fuelled the price surge, including
hopes for higher government spending on steel-hungry infrastructure after the economy grew at its slowest pace in a quarter of a century last year.
The beginning of warmer weather and the end of the Lunar New Year holiday have restarted construction projects and steel production.
Even an upcoming flower show in the Chinese steel hub of Tangshan has been named as a factor, with local steel companies expected to suspend output to ensure blue skies for the event—which could prompt them to step up production before the halt.
China produces more steel than the rest of the world combined, and in the long term, cuts of up to 150 million tonnes in its capacity
over five years could ultimately support steel prices, although their impact on iron ore costs is less clear.

Comments

Poll
Today's Question »
State minister for power Nasrul Hamid yesterday said everyone to have access to electricity by June. Do you think the feat achievable by the timeframe?
 Yes
 No
 No Comment
Yes 48.8%
No 47.2%
No Comment 4.0%
Most Viewed
Digital Edition
Archive
SunMonTueWedThuFri Sat
010203040506
07080910111213
14151617181920
21222324252627
28293031

Copyright © All right reserved.

Editor : M. Shamsur Rahman

Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

Editor : M. Shamsur Rahman
Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

Disclaimer & Privacy Policy
....................................................
About Us
....................................................
Contact Us
....................................................
Advertisement
....................................................
Subscription

Powered by : Frog Hosting