We published a bullish report for iron ore last week to our clients. Please request a full copy: info@drybulkx.com

Consistent with our previous bearish research note published last month, CIF China 62%FE iron ore prices have dropped by another $15 to $102 per ton today. DBX believes the sharp downward trend is likely over, and the market will trade within a range in April, with potential upside. Improving short-term fundamentals, driven by lower export flows, higher margins for Chinese steel mills, and stabilizing iron ore stockpiles at both Chinese and Australian ports, suggest that the market is rebalancing.

Australian iron ore exports reached an all-time monthly high in March, reaching 82.5mt, up 15.3mt from the previous month. Australian iron ore exports typically increase seasonally in March as the weather becomes drier and less windy. Most miners performed well above last year's levels: BHP exports surpassed 25mt for the month, FMG is quickly catching up following the derailment that occurred at the beginning of the year, with exports skyrocketing to 18mt , marking an all-time high for the miner, and Roy Hill exports climbed above 5mt . Only Rio Tinto is lagging; the company’s shipments reached 27.4mt . This marks a significant improvement from 21.4mt in February but remains 3mt below last year's levels. Our real-time stockpile assessment at Port Hedland also suggests that the mines are well stocked, with inventories above 8mt. However, our latest cargo tracking analysis indicates that Australian iron ore flows are expected to retrace to 79.7mt in April.

Brazilian iron ore exports remained stable in March, totalling 28.1mt, down 0.7mt from the previous month. Vale’s shipments remained exactly unchanged at 20.6mt, with the Northern System and the port of Ponta Da Madeira performing better than the Southeastern and Southern systems. CSN and Samarco shipped 2.2mt and 0.8mt during the month, slightly less than in February. DBX anticipates Brazilian exports to taper off slightly further to 27.2mt in April.

The downturn in the Chinese property sector, combined with a relatively weak infrastructure sector, remains the canary in the coal mine for the iron ore market. The steel industry’s Purchasing Managers' Index for March sank to 44.2 — its lowest reading since May of last year. However, short-term fundamentals have started to improve: Despite reaching new monthly highs, Chinese discharge flows have begun to decline. DBX expects total discharge flows to reach 102.5mt in April, which would be 6.5mt lower than in March. Stockpiles at Chinese ports are also counter-seasonally rising, but the increase has started to plateau. Steel mills' inventories have also begun to decline. Capacity utilization for blast furnaces has jumped back up above 90%, aligning with healthier steel margins

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