Iron Ore Market in Brief: Supply jitters prompt rebound in seaborne prices
Seaborne iron ore prices rebounded on Monday July 8, with supply tightness a lingering concern for most market participants.
Commodity | Price | Difference / MT |
MB 62% FE IRON ORE FINES INDEX | USD 118.38 per ton CFR Qingdao | +3.57 USD |
MB 62% FE PILBARA BLEND FINES INDEX | USD 118.30 per ton CFR Qingdao | +4.24 USD |
MB 62% FE IRON ORE INDEX-LOW ALUMINA | USD 119.09 per ton CFR Qingdao | +1.60 USD |
MB 58% FE PREMIUM INDEX | USD 108.46 per ton CFR Qingdao | -1.43 USD |
MB 65% FE IRON ORE INDEX | USD 127.90 per ton CFR Qingdao | +0.60 USD |
MB 62% FE CHINA PORT PRICE INDEX | 882 Yuan per wet metric ton | +4 Yuan |
KEY DRIVERS
Concerns over iron ore supplies in the market were the main reason for a rebound after Friday’s downturn. Seaborne prices had plunged due to sentiment being weighed down by rumors of closer scrutiny of the iron ore market by some mills. However, persistent concerns over supplies was keeping demand for the steelmaking raw material healthy, according to a mill source, with two cargoes of Pilbara Blend fines snapped up at USD119 per MT CFR China and USD115.70 per MT CGR China on the trading platforms.
Iron ore futures on the Dalian Commodity Exchange rose by 3.8% to 861 Yuan per MT (equivalent to USD125 per MT) at the close of the afternoon trading session on Monday, up from 829.50 Yuan per MT on Friday. And July swaps contracts on the Singapore Exchange reversed their downward momentum, rising from USD115.20 per MT at the opening of the market to USD117.58 per MT at the close, up by around 2.07%. Daily index for iron ore 62% Fe fines rose by USD3.57 per MT, while the daily index for iron ore 65% Fe Brazil-origin fines increased USD0.60 per MT.
QUOTE OF THE DAY
“Supply is still the major concern. Inventory is still low in China, while it seems like [steel] production was still high in north China,” a mill source said.
PORT PRICES
Pilbara Blend fines were trading at 875-885 Yuan per MT in Shandong province, compared with 850-888 Yuan per MT a day earlier. The latest price range was equivalent to around USD117-1118 per MT CFR China in the seaborne market.
DALIAN COMMODITY EXCHANGE
The most-traded September iron ore futures contract closed at 861 Yuan per MT on Monday, up 31.50 Yuan per MT from the previous day’s close.
Australia’s QRC calls for increased safety measures after latest fatal mining accident
The Queensland Resources Council (QRC) will hold discussions with the Australian government, mining unions and workers this week regarding action that can be taken to increase safety across the sector. This follows a fatal accident over the weekend at the Baralaba North mine - located in the Bowen Basin of Australia’s Queensland state - that led to the death of a worker.
The company has a multi-year marketing, off take and sales agreement with the Baralaba Coal Co for all the low-vol coal produced at the mine. The mine is ramping up to targeted production rate of 2.25-2.50 million MTs per year. Seaborne coking coal prices have been trending downward in recent weeks amid lackluster demand from buyers outside China and limited interest among Chinese buyers for anything apart from premium low-vol products.
Steel mills have borne the brunt of high prices for steelmaking raw materials this year, which were largely attributed to the suspension of an initial 90 million MTs of production following a fatal accident at an iron ore mine in Brazil earlier this year. Disruptions to Australian supply following a cyclone at the end of March further aggravated the situation and pushed prices to their highest in five years. While many mills have said that the high iron ore prices have so far not affected their procurement strategies for coking coal, some mills have started to raise concerns about narrowing margins as a result of the costly raw materials.
Report By: Javad Najafi
