Iron Ore Market in Brief: Prices get closer to USD120 as Rio targets cut outweighs Vale mine
Seaborne iron ore prices surged further toward USD120 per ton CFR on Thursday June 20 after two of the major global miners updated shipment expectations.
Commodity | Price | Difference / MT |
MB 62% FE IRON ORE INDEX | USD 117.25 per ton CFR Qingdao | +3.17 USD |
MB 62% FE PILBARA BLEND FINES INDEX | USD 116.05 per ton CFR Qingdao | +3.17 USD |
MB 62% FE IRON ORE INDEX-LOW ALUMINA | USD 118.79 per ton CFR Qingdao | +2.98 USD |
MB 58% FE PREMIUM INDEX | USD 108.20 per ton CFR Qingdao | +3.16 USD |
MB 65% FE IRON ORE INDEX | USD 127.30 per ton CFR Qingdao | +2.10 USD |
MB 62% FE CHINA PORT PRICE INDEX | 858Yuan per wet metric ton | +18 Yuan |
KEY DRIVERS
Rio Tinto said late on Wednesday it had lowered the 2019 shipment guidance for its Pilbara iron ore operations in Western Australia to 320-330 million tons on a 100% basis, from an earlier guidance of 333-343 million tons, due to production challenges and need to ensure the quality of its flagship Pilbara Blend products. All at the same time, Brazilian miner Vale said it expected the full resumption of wet processing operations at its 30-million-tpy Brucutu mine in 72 hours, thanks to a high court decision. It thus expected its 2019 iron ore and pellets sales to increase toward the midpoint of the target range of 307-332 million tons, which was unchanged.
Iron ore derivatives on China’s Dalian Commodity Exchange and the Singapore Exchange both opened lower on Wednesday night, but then moved higher. The September futures contract on DCE was range-bound on Thursday morning, while the January and May 2020 contracts retreated. However, all three contracts advanced again in the afternoon, with the September contract ending 3.9% higher than the previous day’s settlement level. The weakening of the forward-month contracts in the morning could indicate that the market has priced in Vale’s production recovery as more of a medium-term factor, while the strength in the near-month contract and in general could reflect a short-term bullishness that is being further fueled by Rio’s cut in its sales target.
July-arrival PB cargoes are getting even scarcer in the market, with index-linked bids for Capesize shipments of PB fines heard made as high as a premium of USD5.50 per ton, which is an all-time high. Bids for similar Australian Newman fines were also seen at a premium above USD5 per ton during the day. At Chinese ports, trading activity improved on that seen in the previous day, although transaction prices recorded a more modest rise compared with the futures markets. Daily MB 62% Fe Iron Ore Index rose USD3.17 per ton, while the daily MB 65% Fe Iron Ore Index increased USD2.10 per ton.
QUOTE OF THE DAY
“The iron ore market has been red hot today and prices have surged based on the news of Rio Tinto’s guidance cut, and the general feeling is that market participants are optimistic over the China-US trade talks during the G20 summit,” a Singapore-based trade source said.
Report By: Mohammad Reza Barakchian
