According to Mining News Pro - On weekly reports we are trying to put an scoop on the metal market and find out what is happening in the global market.
Iron ore price rises on hopes of Chinese stimulus measures
Iron ore price rose on Thursday as investors looked for Chinese government measures to uplift its economy reeling from a recent resurgence in covid-19 cases.
According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were changing hands for $152.25 a tonne during morning trading, up 1.06% compared to Wednesday’s closing.
The cabinet said on Wednesday China would use timely cuts to reserve requirement ratios and other policy tools to support the economy, as well as industries and small firms hit by the pandemic.
China’s commercial capital Shanghai has locked down its 25 million residents for almost three weeks as authorities attempt to contain the country’s biggest outbreak of covid-19 since the coronavirus was first identified in the city of Wuhan in late 2019.
The restrictions in Shanghai, and in other Chinese cities, are starting to ripple through global supply chains, with some factories being forced to close and delays increasing at ports.
Li Wentao, an analyst with Tianfeng Futures highlighted that some Chinese cities had recently relaxed their property sales policies.
“… Real estate sales are improving, and the market is mainly focusing on how long will it take to transfer (this momentum) to the property development sector.”
Li also expects steel demand to recover in the second half of the year and flagged that prices of steelmaking raw materials, such as iron ore, coke and steel scrap, were still high and squeezing mills’ profits.
Global steel demand is likely to grow 0.4% to 1.84 billion tonnes this year, slowing from a 2.7% gain in 2021, hit by the uncertain outlook created by the conflict in Ukraine and rising, the World Steel Association (WorldSteel) said on Thursday.
“The expectation of a continued and stable recovery from the pandemic has been shaken by the war in Ukraine and rising inflation,” WorldSteel said.
“The impact will also be felt globally via higher energy and commodity prices – especially raw materials for steel production – and continued supply chain disruptions, which were troubling the global steel industry even before the war.”
Demand in China, which accounts for about half of global steel consumption, is now expected to remain flat this year, the association said.
“There are further downside risks from the continued surge in virus infections in some parts of the world, especially China, and rising interest rates,” it said.
Gold price extends gains to reach 1-month high with inflation soaring
Gold extended its streak of gains on Wednesday as demand for the safe-haven metal continued to rise against soaring inflation amid the Russia-Ukraine war.
Spot gold rose 0.6% to $1,979.66 per ounce by 12:30 p.m. ET, its highest in a month. US gold futures were up 0.3% to $1,981.80 per ounce in New York.
Gold’s recovery comes at a time when bullion is enduring pressure from expectations of an aggressive US interest rate hike and a robust dollar. Supporting this gold rally is the latest US inflation data, which showed monthly consumer prices are still surging.
Gold seems to be “ignoring the stronger dollar and rising US rates, and they seem to be singularly focused on inflation,” Edward Meir, an analyst with ED&F Man Capital Markets, told Reuters.
“We’re importing inflation here,” said Daniel Pavilonis, senior market strategist at RJO Futures, adding there is “real scare of more inflation coming from the lack of exports, the lack of shipments and back orders and all the other shipping costs” due to the Ukraine crisis.
Russian President Vladimir Putin said on Tuesday peace talks with Ukraine had hit a dead end, which signals that the war could grind on for longer, adding further support for gold.
Shanghai zinc price soars to near 15-year high
Shanghai zinc prices rallied to their highest since July 2007 on Wednesday on worries over supply shortages in top consumer China.
The most-traded May zinc contract on the Shanghai Futures Exchange rose as much as 5.4% to 28,995 yuan a tonne ($4,554.16), before settling up 3.2% at 28,395 yuan ($4,459.92).
Benchmark zinc on the London Metal Exchange hit $4,521.50, the highest since March 8. Prices of the metal, used to galvanize steel, hit a record high of $4,896 a tonne last month.
“Zinc inventories have drawn down sharply and the situation is worsening for European smelters to keep their margins positive amid fears of another power crisis,” said ANZ analyst Soni Kumari.
“The market sentiment for industrial metals was boosted by easing of transportation bottlenecks in China … further boost came from increasing economic support.”
Market analyst Fitch Solutions Country Risk & Industry Research has recently revised its 2022 zinc price forecast higher by more than 20% to $3,500 per tonne.
In a report, Fitch argues that metal prices are being bolstered by the energy crisis stemming from the ongoing Russian invasion of Ukraine that has led to many smelters halting or reducing zinc metal production.