Iron ore futures surge on DCE! Discover the cause behind this jump and what the future holds.
Cast iron or iron ore is crucial to a country’s economy. It is used in manufacturing and is essential for building infrastructure and participating in global trade. Changes in iron ore production and prices can significantly affect the country’s economy.
Speaking of prices, iron ore prices went up on Monday, 11th September 2023. In this article, we will explore why iron ore prices are rising.
Iron ore futures prices increased on Monday, 11th September 2023, due to improved economic data from China, the world’s second-largest economy.
The price of the most traded January iron ore contract on China’s Dalian Commodity Exchange (DCE) surged by 1.86% to reach 847 yuan ($115.68) per metric tonne at 0232 GMT, as reported by the Times of India.
Similarly, benchmark October iron ore prices on the Singapore Exchange also saw a rise of 2.18%, reaching $115.8 per metric tonne at 0236 GMT.
Reason for the Rise in Iron Ore Futures Prices
When we consider the factors behind the increase in iron ore futures prices, the most significant reason was the consumer prices in China. In August 2023, China’s consumer prices moved into positive territory, and there was a slowdown in the decline of factory-gate prices (the prices of goods when they leave the factory before any retail profit or additional costs like taxes, shipping, etc.), as reported by the Times of India.
Simultaneously, the pressure of deflation decreased, indicating signs of economic stabilisation.
Furthermore, iron ore prices stayed steady because the demand remained strong, as evident from the consistently high daily production of this crucial metal.
Importance of Iron Ore in the Economy of a Country
Iron ore holds great importance in a country’s economy due to its versatile applications. It is used in the metal industry, the construction sector, and the manufacturing of various types of equipment. Iron ore is a crucial ingredient in producing steel, essential for constructing buildings, bridges, and other structures. Moreover, it plays a vital role in crafting diverse equipment such as vehicles, motorcycles, agricultural machinery, etc.
Beyond these uses, producing and exporting iron ore boosts international trade.
Iron ore significantly contributes to various sectors of the economy and plays a pivotal role in promoting industrialisation and overall development within the nation.
While there was indeed a rise in iron ore futures prices on the Dalian Commodity Exchange on 11 September 2023, experts advise caution for the future.
Cheng Peng, an analyst based in Beijing at Sinosteel Futures, pointed out that we should exercise caution regarding potential risks to raw materials as long as the steel market remains weak, as reported by The Times of India.
In addition, certain Chinese coking plants (used to produce coke or coking coal from metallurgical coal) have proposed increasing their coke prices by 100 to 110 yuan per tonne starting from 11th September 2023, citing rising production costs.
Some experts believe this ongoing conflict between coke producers and steel mills might lead to unfavourable outcomes.
That’s it for today. We hope you’ve found this article informative. Remember to spread the word among your friends. Until we meet again, stay curious!
*The article is for information purposes only. This is not an investment advice.