io pries on the increase again

MBIO Index 20 August 2010; Index continues slow rise up to $147.71
20 AUGUST 2010
The MBIO Index today calculated to $147.71/tonne cfr Qingdao on a 62% Fe basis.
This is a rise of $0.61 on yesterday and means the index has risen $3.68 this week. This takes the index to the highest level since the 20th May, exactly three months ago. The slow rises this week under-line the seeming uncertainty in the direction of the iron ore price. There have been very few deals done this week, especially considering the noticeable rise in transactions seen last week.
Assessments for 63.5% Indian material rose today to $156-$158/tonne from $154-$157/tonne yesterday as the spread closed. This week we saw a number of the major mills increase their steel prices for September. Although this would seem to suggest positive sentiment for Chinese demand, the increase in many cases was smaller than expected, with Baosteel only cutting discounts for some products.
The recent rally in steel prices seems to be losing momentum and it appears that much of the rise in iron prices have been sustained through these rises. If this momentum goes, it is unlikely iron ore prices will continue to climb unless a significant change in demand materializes. Next week the High Court of Karnataka is due to decide whether the ban on exports imposed by the state is legal and the fallout from this may be the catalyst to reverse the current price trend.