Iron ore price rollercoaster sends jitters through cape community

The iron ore price rollercoaster combined with a growing amount of the steel-making ingredient commodity piling up at Chinese ports has spooked some shipowners in recent days.

Analysts remain divided on how to read Chinese appetite for iron ore, the dominant buyer of the largest seaborne dry bulk commodity. 

Iron ore prices have swung from above $140 per tonne to below $100 this year, before staging a revival this week to $110. At the same time, iron ore stockpiles at Chinese ports have been climbing, potentially denting previously buoyant capesize rates.
 

“Looking ahead to the end of March, uncertainties loom, particularly concerning the resilience of the current buoyant sentiment,” states a new report from Greek shipping data platform Signal, listing challenges such as the ongoing struggles of the Chinese economy within its real estate sector and the downward trajectory of iron ore prices as well as the surge in Chinese port inventories, which Signal attributes to waning demand for steelmaking materials.

The “wild” swings in iron ore prices and rising stockpiles have got some owners feeling a “bit jittery” conceded analysts at brokers Arrow in a new research report. 

While last week’s iron ore price decline was significant Arrow argues it is not a major cause for concern at present. The primary reason, Arrow argues, for the sharp drop appears to be a surge in supply rather than a huge drop in demand. 

Additionally, the decline was exacerbated by souring sentiment, which seems to be improving following the release of better-than-expected data out of China earlier this week as well as the improving global macro outlook.