Iron Ore Market in Brief: Prices progress towards USD115 amid futures surge
Physical iron ore prices continued to advance on Wednesday June 19 amid big gains in the futures markets following amelioration of trade tensions between China and the United States.
Commodity | Price | Difference / MT |
MB 62% FE IRON ORE INDEX | USD 114.08 per ton CFR Qingdao | +1.80 USD |
MB 62% FE PILBARA BLEND FINES INDEX | USD 112.88 per ton CFR Qingdao | +1.80 USD |
MB 62% FE IRON ORE INDEX-LOW ALUMINA | USD 115.81 per ton CFR Qingdao | +1.35 USD |
MB 58% FE PREMIUM INDEX | USD 105.04 per ton CFR Qingdao | +2.07 USD |
MB 65% FE IRON ORE INDEX | USD 125.20 per ton CFR Qingdao | +1.90 USD |
MB 62% FE CHINA PORT PRICE INDEX | 840Yuan per wet metric ton | +23 Yuan |
KEY DRIVERS
US president Donald Trump said on Tuesday that he had spoken to Chinese president Xi Jinping over the telephone and that the two countries would restart trade talks soon. The global financial markets responded positively to the news, with China’s ferrous futures all rising sharply on Tuesday night. The benchmark iron ore contract remained firm on Wednesday to end 5.1% higher than the previous day’s settlement level.
China’s rebar and hot-rolled coil prices also increased by 10-40 Yuan ($1.45-5.78) per ton over the day. Spot iron ore trading activity cooled at Chinese ports, while transaction prices rose in line with futures gains. In the seaborne market, a miner sold a July-loading Capesize shipment of Pilbara Blend fines at a premium of just above $5 per ton against the 62% Fe index.
This is the first time on record the brand has fetched such a high premium, according to sources. Meanwhile, an offer for a cargo of high-grade Iron Ore Carajas on a platform failed to attract bids. Interest in the product at Chinese ports has recovered slightly, however, due to low stocks and a narrowed price gap between high and mid grades, market participants said.
With generally smaller profit margins, Chinese steelmakers are prioritizing lower-cost material, such as Indian fines, over productivity and alumina impurities in iron ore, according to a trader in Shanghai. Daily MB 62% Fe Iron Ore Index rose by $1.80 per ton, while the daily MB 65% Fe Iron Ore Index increased by $1.90 per ton.
QUOTE OF THE DAY
“The iron ore price has been skyrocketing while steel prices have largely been heading in the opposite direction. For now, most bigger steel mills are still making some profit from long products, while hot-rolled coils are seeing zero profit and cold-rolled coils are incurring losses,” – China-based mill source.
Report By: Javad Najafi
