In contrast to the volatility experienced by many commodities, iron ore prices have declined over the past seven months and are hovering in a narrow range.
A shift in China's winter pollution reduction strategy could wake up iron ore prices, but it is far from clear how much they could change.
Last week, China's Ministry of Environment and Ecology unveiled a pollution control plan that allowed local governments to take action based on regional emission levels rather than imposing general restrictions on heavy industry.
This was first seen by the market as a relaxation of stringent air quality regulations so that heavy industries such as steelmaking would not face production constraints as severe as last winter.
This would mean that steel mills can continue to operate at a high rate during the winter, potentially creating a surplus of metal during times of traditionally weak demand.
However, there is currently some uncertainty as to what policy changes actually mean and how local authorities will meet their emission targets.
Barclays Bank analyst Ian Littlewood said the bank believes the market is underestimating the impact of China's emissions cuts on steel and iron ore.
The iron ore market directly depends on the environmental policy of China
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Azovpromstal® 8 October 2018 г. 11:51 |
