Positive Manufacturing Data Raises Hopes for Iron Ore Industry in China
Published By : 03 Jun 2015 |Published By : QYRESEARCH
Positive Chinese manufacturing data has brought respite to the Australian iron ore companies such as Rio Tinto and BHP Billiton. It has been a bad year for iron ore companies with prices dropping down to US$50 per ton in the last couple of months. Though the manufacturing data has not been excellent, the positive figures indicate rise in steel demand which will help the iron ore industry to recover after long time. The Purchasing Manager Index has registered 50.2 points in May which points out that the manufacturing sector in the country is operating above its long term average.
In the past couple of weeks, the price of iron ore has increased above US$60 per ton. Though it is not as high as the rate of US$180 per ton registered during the peak time of the iron ore industry, it is reasonable compared to the rate of US$50 per ton in March. This tells that the construction orders are coming back which has led to the demand for steel. About one third of steel demand in China comes from new property developments. Construction activities will keep the strong demand for iron ore in the country. However, for how long the construction industry will grow in the country is not known as falling property prices have led to oversupply of housing.
Though the Chinese economy has been sluggish in the past couple of months, the government has set up a target to achieve 7% GDP growth rate in 2015. Several measures have been taken to boost the economy. The positive manufacturing figures in May might reflect the move in the right direction.