Iron Ore Market in Brief: Seaborne prices tumble amid restrictions in North China
Iron ore prices continued to rebound on Friday July 26 amid rumors that China could be less strict with its steelmaking restrictions next winter.
Commodity | Price | Difference / MT |
MB 62% FE IRON ORE FINES INDEX | USD 118.31 per ton CFR Qingdao | +1.31 USD |
MB 62% FE PILBARA BLEND FINES INDEX | USD 118.23 per ton CFR Qingdao | +1.31 USD |
MB 62% FE IRON ORE INDEX-LOW ALUMINA | USD 119.57 per ton CFR Qingdao | +2.29 USD |
MB 58% FE PREMIUM INDEX | USD 106.84 per ton CFR Qingdao | +3.33 USD |
MB 65% FE IRON ORE INDEX | USD 126.60 per ton CFR Qingdao | +1.70 USD |
MB 62% FE CHINA PORT PRICE INDEX | 881Yuan per wet metric ton | +16 Yuan |
KEY DRIVERS
News circulated among Chinese market participants in the afternoon that the country’s authorities could list as “class A” those steelmakers that have fully achieved ultra-low emissions standards, and exempt them from the compulsory winter production restrictions that are intended to reduce pollution.
There is currently only one mill that falls into “class A” in China’s steel hub of Tangshan, where steelmakers have been asked to slow down operations in each of the past two winters. But more mills could join the premium category this winter, after their investments into environmental-friendly improvements, sources said.
The country’s iron ore futures were range-bound in the morning trading session, but they advanced in the second half of the day, especially for the January 2020 contract. The January contract ended 4.2% higher than the previous day’s settlement level, while the September 2019 contract rose by 3.4%.
In Tangshan, mills were hot-idling their blast furnaces from Friday to Sunday, in compliance with a local government requirement to cut emissions. Almost no spot iron ore trading activity was reported at the ports in the city during the day, while transactions at ports in other regions were also limited. Prices went up in the afternoon in line with the futures performance.
In the seaborne market, a miner was heard to have sold a cargo of Pilbara Blend fines for mid-August loading, at a premium of USD4.55 per MT on an index-linked basis. The premium was down from the USD5.50 per MT it secured for a similar shipment last Thursday. Premiums have generally come down for Australian 62% Fe fines recently, sources said.
Index for iron ore 62% Fe fines rose by USD1.31 per MT, while the daily index for iron ore 65% Fe Brazil-origin fines increased by USD1.70 per MT.
QUOTE OF THE DAY
“The market seems split over whether mills in Tangshan would resume high production after restrictions at the end of July, while most felt that the upcoming winter restrictions were likely to be less strict,” a Singapore-based trader said.
PORT PRICES
Pilbara Blend fines traded around 870-895 Yuan per MT in Shandong province and Tangshan city during the day, compared with 850-873 Yuan per MT a day earlier. The latest price range was equivalent to USD118.90-122.40 per MT CFR China in the seaborne market.
Report By: Javad Najafi
