chinese to "vigorously" increase imports!!!, page-2

Bullish Comments on Iron Ore Contrary to Recent Trends
by stuart on September 7, 2010

In spite of reports of over stocking and recent falls in prices some parties are predicting that a rise in steel demand early next year in China will lead to a significant rise in iron ore prices from recent lows. A Reuters article states rising demand in China coupled with falling supply from India will create the environment for the big three iron ore producers of Vale, BHP and Rio to raise prices. The iron ore producers moved from an annual contract to a quarterly contract and question marks remain as to whether the quarterly contract will survive. Major Chinese iron ore consumers buy their full allocation when prices rise, even going to the extent of selling surplus tonnage on to smaller Chinese consumers at higher spot prices but when spot prices fall below the contract price, they promptly renege on the quote and buy on the spot market.




This graph from Reuters tracks the annual and quarterly benchmark prices against spot over the last few years.

Standard Chartered Bankss Judy Zhu is quoted as predicting iron ore will rise to US$ 200 per metric ton from around $140 per ton today as Chinese steel demand rises further in 2011 to between 613 and 625 million tons.



The technical signs in the short term are not good though as this graph shows. Both chartists and market observers are predicting prices could weaken over the coming months but thereafter some predict prices will rise.