SM Commodities Index - March 2020

10 April 2020

The latest prices and key trends from the SM Commodities Index. 

Iron ore

Iron ore prices increased February to March due to both supply and demand factors, according to IHS Markit. On the supply side, iron ore shipments from both Australia and Brazil fell sharply 8.6% year-on-year (y/y) in January and 14.2% y/y in February due to strong seasonal rains. As a result, March iron ore inventories at Chinese ports were around 115 MMt, just above the 2019 low of 114 MMt at the height of the iron ore supply crunch last year. In terms of demand during this time, we saw the temporary shut-down of Chinese manufacturing, but blast furnace capacity utilisation in China only fell 7 percentage points to 73% at the lowest point of the shut-down. Therefore, as China opened up again through March, iron ore demand increased as blast furnace utilisation returned to 77%. This uptick in demand coincided with weak shipments and prices moved higher.


As with many commodities, cotton is a victim of Covid-19. Cotton price was able to keep some strength when China was going through the pandemic though it is the largest cotton consuming country. Now that China is coming back online cotton is back to being spun for fabric, but unfortunately the fabric now has nowhere to go. The major consuming regions for textiles (US and EU) are cancelling orders. Clothing stores are closed and already have inventory either in containers stuck in the supply chain or in unopen shops. Another factor is that the drop in oil prices has made man-made fibres more competitive. For the limited market that is still operational, cotton has to compete with other cheaper textiles. There will likely be a demand spike when stores resume, but the timing is unknown and companies will be sitting with unsold product till then.

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