Iron Ore Market in Brief: Concerns on mill margins, range-bound Prices
Iron ore prices were range-bound on Friday June 21 with more concerns raised over the profit margins of Chinese steelmakers.
Commodity | Price | Difference / MT |
MB 62% FE IRON ORE INDEX | USD 116.98 per ton CFR Qingdao | -0.27 USD |
MB 62% FE PILBARA BLEND FINES INDEX | USD 115.78 per ton CFR Qingdao | -0.27 USD |
MB 62% FE IRON ORE INDEX-LOW ALUMINA | USD 118.46 per ton CFR Qingdao | -0.33 USD |
MB 58% FE PREMIUM INDEX | USD 107.76 per ton CFR Qingdao | -0.44 USD |
MB 65% FE IRON ORE INDEX | USD 127.80 per ton CFR Qingdao | +0.50 USD |
MB 62% FE CHINA PORT PRICE INDEX | 856Yuan per wet metric ton | -2 Yuan |
KEY DRIVERS
China’s iron ore futures largely trended downward during the day before a moderate recovery for the benchmark September contract in the afternoon. The July and August 62% Fe derivative contracts on the Singapore Exchange recorded similar movements. Weekly industry data released by a local data provider show the blast furnace utilization rate at steelmakers in China fell for a second week, while iron ore port stockpiles dropped at a slower pace.
Iron ore inventories at 45 major Chinese ports totaled 117.52 million tons on Friday, down 0.44 million tons from a week earlier, compared with a 3.63-million-tonne drop last week, according to the data. Chinese mills have already been trimming production yields of hot metal by using cheaper iron ore with lower Fe and higher impurities, and some of them could be targeting further maintenance outages in the coming months given the current weaker profitability, market participants said.
Sources said it is, therefore, risky to book seaborne iron ore shipments at fixed prices right now, although premiums continued to strengthen for mainstream 62% Fe Australian products. Newman fines and Pilbara Blend fines were heard to have traded at the July average of a 62% Fe index at a premium of USD5.65 per ton, which is a historical high. Meanwhile, low-alumina and higher-cost Brazilian cargoes of Iron Ore Carajas and Brazilian Blend fines remained unable to secure a buyer on platforms.
Daily MB 62% Fe Iron Ore Index fell USD0.27 per ton, while the daily MB 65% Fe Iron Ore Index increased USD0.50 per ton.
QUOTE OF THE DAY
“The supply of steel products has continued to outrun demand in China, so mill margins could narrow further in July. If many mills start to cut production then, iron ore demand and prices would lose support,” a trader in Shanghai said.
Report By: Mehrdad Najafi
