COLUMN-Iron ore volatility masks positive shift in fundamentals: Russell

lunes 18 de julio de 2016 00:31 GYT

(The opinions expressed here are those of the author, a columnist for Reuters.)

By Clyde Russell

LAUNCESTON, Australia, July 18 (Reuters) - Iron ore's wild price gyrations this year may be masking a small, but significant, shift in the underlying fundamentals for the steel-making ingredient.

While seaborne iron ore remains a well-supplied market, it appears the level of over-supply has been diminishing faster than many expected, leading to an improvement in the supply-demand balance.

This provides some fundamental justification for the rally in spot prices, with the China benchmark index .IO62-CNI=SI up almost 35 percent so far this year.

Let's be clear, there is no reason to believe that iron ore is poised for a major, sustained rally.

But there is reason to be hopeful that prices are more likely to pivot around the $50 a tonne mark, rather than revisit the December 2015 lows of $37 a tonne.

The main reasons for prices finding a floor are improvements on both the supply and demand side.

For demand, this is largely due to China, which buys about two-thirds of seaborne iron ore and is the world's largest steel producer.   Continuación...