Falling iron ore prices to force small traders out of market in ChinaChina / Iron OreThe Chinese market can undergo restructuring in the next 1-2 years. Small traders will be forced to leave the market amid falling iron ore prices, while large ones will have to adjust to the new market reality. The first closures can occur in the first quarter of 2015, i.e. the time when loans are repaid and banks toughen their policy. As a result, small companies that are having hard times now will hardly be able to return to the market, given this year's plummeting prices. “Many markets are going through tough times, but situation with iron ore is the most serious,” a trader thinks. The margin of some traders is only $0.3-0.5/t. “I think that the sales system will be changed and there will be only a few large traders left in the market,” a trader's representative says. Large traders will be able to adapt to new market conditions thanks to good financial results, in particular “due to purchasing their own vehicles, increasing working capital to reduce dependance on banks, as well as hedging,” a representative of a large trading company shares with Metal Expert. Decreased iron ore stocks at ports can be one of the consequences of the above scenario, since now about 20-30% of the volumes are used as a collateral.
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