Iron ore price, page-10917

That is why Dailan is called "Futures" Market.

Futures for IO looks very bullish in the next few months, Environmental Protection policies coming to an end, Inventory for Steel continue to fall at faster rate, need for IO will be stronger in coming months, Vale's IO ship to China will fall in coming months, Dalian saw volume for IO Futures increased dramatically in the last 2 days.

Late yesterday, Chinese Premier Li Keqiang said in a press conference that VAT will be decreased from 1/April. China will reduce the rate of value-added tax (VAT) for manufacturers to 13% from 16%, and slash the VAT rate for the transportation and construction sectors to 9% from 10%. Besides Tax and Fees cuts, small business finance will be reduced by 1%.

The news basically boosted Dalian and saw a late rebound in IO Future. This policy is good for IO.

VAT cuts for manufacturing could boost Chinese demand for steel and raw materials, although incremental demand growth for steel wouldn't show until the second half of 2019, according to executives at Chinese steel mills and Australian iron ore companies.

Manufacturing accounts for roughly 29% of Chinese GDP, according to the National Bureau of Statistics, and around 30% of the country's steel consumption.

Iron ore seaborne cargoes are expected to be more competitive in the short term, sources said. The new VAT will apply to iron ore cargoes arriving in China from April, and end-users are deferring some seaborne purchases to April arrival to cut costs.

"Considering current flat price levels, it means imported iron ore prices will go down by Yuan 20/wmt, or $2.6/dmt, in April," a procurement source in Hebei province said. "Mills with no urgent needs would prefer to wait until April for restocking."

Therefore we see spot market currently on a "Need to Buy" state, Steel mills are waiting until April.

FMG SP should be very strong in coming months.

DYOR
Frank