Rising steel prices have impacted spot iron ore prices, which also rose, for the fourth straight session this past week.
According to a report from Business Insider, the iron ore gains came with another boost in Chinese steel prices and can be attributed to announcements made at the International Horticultural Expo, adding further weight to the argument that the government-mandated slowdown in steel production in China has impacted steel prices and, as a result, iron ore prices.
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It is important to note China’s unsold home inventory of 52 months given the current pace of sales and that the domestic real estate industry’s improvement may not last very long as a result, particularly as it relates to construction.
Steel Prices on the Rise Since February
According to a recent report from our own Raul de Frutos, steel prices have been on the rise since February and, at the same time, a broad recovery has also been underway among industrial metals due, in part, to a weaker dollar and rising oil prices.
“Steel prices are also getting a boost thanks to new anti-dumping determinations, a decline in US imports and a surge in iron ore prices. It’s pretty normal to see sharp rallies in bear markets only to then see prices fall again,” de Frutos said. “Indeed, we just saw that pattern in steel prices last year. It’s yet not clear how long this rally will last, but current macro-conditions will need to improve to make us think the rally is finally the one ending this bear market.”
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