Iron Ore Market in Brief: Seaborne prices gain amid wider rally in ferrous complex
Seaborne iron ore prices pushed up again on Monday July 1, with gains also seen in the downstream sector in China.
Commodity | Price | Difference / MT |
MB 62% FE IRON ORE INDEX | USD 123.65 per ton CFR Qingdao | +5.18 USD |
MB 62% FE PILBARA BLEND FINES INDEX | USD 121.69 per ton CFR Qingdao | +5.18 USD |
MB 62% FE IRON ORE INDEX-LOW ALUMINA | USD 125.76 per ton CFR Qingdao | +6.12 USD |
MB 58% FE PREMIUM INDEX | USD 113.67 per ton CFR Qingdao | +4.56 USD |
MB 65% FE IRON ORE INDEX | USD 131.50 per ton CFR Qingdao | +3.40 USD |
MB 62% FE CHINA PORT PRICE INDEX | 884 Yuan per wet metric ton | +20 Yuan |
KEY DRIVERS
Trading activity involving the 65% Fe iron ore derivative contract remained robust, with 250,000 tons traded and cleared by 6.40pm on Monday July 1. Meanwhile, positive developments in the trade talks between China and the United States gave the steel market a boost. US president Donald Trump said the country would not impose additional tariffs on Chinese goods after a meeting with his Chinese counterpart Xi Jinping on the sidelines of the G20 summit in Osaka, Japan, last week.
The news boosted the steel prices, with fob China rebar index rising USD9.13 per ton to USD 521.63 per ton on Monday, up USD 9.13 per ton. A buyer source, however, said that the rally in iron ore prices was not a result of the easing trade tensions. “The steel prices are being supported by the environmental restrictions in China and those in turn are supporting iron ore prices.
More than trade talks, our focus is on how the iron ore market will perform in the second half of the year, especially the level of buying ahead of the national day holidays in October,” he said. Another trader source said that any perceived easing or heightening of trade tensions will have some impact on prices in the commodities markets, and iron ore is not exempt from that.
“People love news and to that extent there is some impact on sentiment as news of trade talks progress emerges,” he said. “However, in this particular instance it would be premature to say tensions have eased or that they are the driver of iron ore prices.” Meanwhile, supply jitters in the market for July-loading cargoes have kept seaborne iron ore prices up, despite restrictions on production being implemented across the Tangshan region, according to trade sources.
Physical trading in the market remained thin on limited supplies, with bids for Pilbara Blend fines seen on trading platforms at around USD119-125 per ton CFR China, but not deals were concluded. Some market participants believe that the high bids were tabled as a sign that some parties were still seeking prompt July-loading cargoes, according to trade sources.
Australian iron ore fines were expected to be limited after major iron ore miner BHP said it would be carrying out maintenance works in the first half of July at its Newman hub, one trader said. Port-side trades were active, with Pilbara Blend fines up by around 15-30 Yuan per WMT in Tangshan, and up by 25-30 Yuan per WMT in the Shandong region.
Some traders believe that the trading activity at the Chinese ports was likely to have been prompted by lower port inventories and an already tight spot supply market. Inventories at the 45 Chinese ports were said to have dipped for the eighth week in the seven days to June 27, to reach around 115.7 million tons, according to market sources.
Daily MB 62% Fe Iron Ore Index rose by USD5.18 per ton, while the daily MB 65% Fe Iron Ore Index increased USD3.40 per ton.
QUOTE OF THE DAY
“Due to the strict restrictions on steelmaking operations in parts of China, the average profits at mills are still [being] supported and maybe going up and mill demands for good-quality iron ore brands has persisted despite the high prices,” a buyer source from China said.
Report By: Javad Najafi
