(Updates with Baltic Exchange rates starting in ninth paragraph.)
Jan. 24 (Bloomberg) -- Iron ore will almost erase the past two months’ rally and fall 19 percent in the second quarter as weather stops disrupting supply and Chinese restocking ends, according to a Barclays Plc trader of the commodity.
The raw material used to make steel will average $120 a dry metric ton in the three months from April, said Richard Lee, who most accurately predicted Chinese ore imports in a September survey of 11 analysts, traders and brokers. The ore rose 0.6 percent to $148.60 a ton today, prices from the Steel Index Ltd. show. Second-quarter swaps to bet on, or hedge, prices are trading at about $136.25 a ton, according to SSY Futures Ltd.
Iron ore rebounded as much as 83 percent since plunging to an almost-three-year low in September, according to the Steel Index. China, the world’s biggest importer, is rebuilding inventories before the Lunar New Year, and storms closed ports in Australia, the largest supplier. The rally will end next quarter as underlying steel demand remains weak, Lee said.
“Supply is tight due to weather, and restocking demand should hold for the next month or so,” Lee said by e-mail yesterday. “But once these subside into spring, it could expose steel demand as rather soggy still. Firm Chinese growth numbers, while positive for the macro economies, are not very encouraging for stimulus.”
Expansion in China
China’s economic risks have shifted back to growing too quickly as new regional-government officials try to boost development, Fan Gang, a People’s Bank of China academic adviser from 2006 to 2010, said yesterday in an interview in Davos, Switzerland, where he is attending the World Economic Forum.
Ore with 62 percent content at the Chinese port of Tianjin has declined 6.2 percent since reaching a 14-month high of $158.50 a ton on Jan. 8, Steel Index data show.
Chinese imports rose to a record 70.9 million tons in December, customs data show. Inventories dropped 28 percent since September to 69.7 million tons, the lowest since 2010, according to Beijing Antaike Information Development Co. The world’s second-largest economy is accelerating after seven quarters of slowing growth.
Harbor masters reopened the Australian ports of Cape Lambert, Dampier and Port Hedland yesterday after a tropical cyclone forced ships to stop loading. Interruptions linked to weather are likely in coming months, Oslo-based investment bank RS Platou AS said in an e-mailed report yesterday.
Charter rates for Capesize vessels hauling 160,000 tons of commodities such as iron ore and coal fell 3.1 percent to $8,167 a day, according to the Baltic Exchange, the London-based publisher of shipping costs. Six carriers were booked to China, including four from Australia and one each from Brazil and South Africa, Sam Margolin, an analyst at Dahlman Rose & Co. in New York, said in an e-mailed report today.
The Baltic Dry Index, a broader gauge of costs to ship raw materials, fell 1.1 percent to 808, the bourse’s figures showed today. The three smaller vessel types tracked by the index all slid less than 1 percent. Daily earnings for Panamaxes declined 0.5 percent to $5,728, while Supramaxes and Handysizes dropped 0.1 percent to $7,449 and $7,139, respectively.
--Editors: Dan Weeks, Sharon Lindores.