From Macquarie:
After falling over $40/t between February and the middle of June to $53/t, spot 62%fe iron ore prices have seen a mild rebound over the last two weeks to $63/t (though faded today to $62/t, according to TSI). We wrote in early June that low mill inventories and high mill margins could be supportive for iron ore prices, and indeed these factors may continue to support prices in the very near term. Nonetheless, with prices now back above $60/t, we reiterate that we see structural downside to prices over 2H17, as steel output should decline from current record levels and iron ore supply remains more than plentiful with prices above $60/t.
The latest pick-up in iron ore prices may also have been influenced by end first-half liquidity injections rather than fundamentals. SHIBOR rates have eased since mid-June and it’s not just iron ore prices which have improved; copper prices have also risen by 4.6% in the same time. If this was the sole reason for the price increase, we would expect to see prices for all commodities continue to ease this week if SHIBOR levels out.
