Iron Ore Market in Brief: SGX's Fe derivative contract, hit monthly volume trade
Singapore Exchange’s (SGX) 65% Fe iron ore derivative contract hit a monthly-traded volume of 2.0397 million tons as on Monday July 29, the highest since the contract’s launch on December 3, 2018.
Commodity | Price | Difference / MT |
MB 62% FE IRON ORE FINES INDEX | USD 117.99 per ton CFR Qingdao | -0.32 USD |
MB 62% FE PILBARA BLEND FINES INDEX | USD 117.91 per ton CFR Qingdao | -0.32 USD |
MB 62% FE IRON ORE INDEX-LOW ALUMINA | USD 119.21 per ton CFR Qingdao | -0.36 USD |
MB 58% FE PREMIUM INDEX | USD 105.79 per ton CFR Qingdao | -1.05 USD |
MB 65% FE IRON ORE INDEX | USD 125.80 per ton CFR Qingdao | -0.80 USD |
MB 62% FE CHINA PORT PRICE INDEX | 885Yuan per wet metric ton | +4 Yuan |
KEY DRIVERS
On Monday, 1,700 lots of the SGX 65% Fe derivative contract were traded and cleared by 6.30pm Singapore time. A broker source told that the volumes were headed in the right direction, with volatility in mid- and high-grade spread drivers attracting participants’ interest in derivatives trading.
The previous high was 1.907 million tons, which was cleared in December last year, followed by 1.54 million tons cleared in May. Meanwhile, China’s iron ore futures prices trended lower in the morning trading session and continued to do so toward the close of afternoon trading session.
Chinese steel futures had also trended lower before the close of the market. The market on Monday was heard to be more illiquid, with few market participants involved in the futures market, according to brokers.
A similar downward trend was also observed for the 62% Fe derivative contract on the SGX, as the August contract was seen weakening by around USD1 per ton to USD 114 per ton, falling from the previous day’s closing price of USD114.96 per ton. Furthermore, seaborne iron ore prices were down slightly on Monday, as spot market activity remained thin, with limited bids and offers heard, likely due to market participants adopting a wait-and-see stance.
Some market participants were likely waiting on the sidelines to observe the impact of when the environmental restrictions are lifted in the steel making hub of Tangshan. A mill source also mentioned that there were no announcements on the blanket production cut for the upcoming winter, but buyers were probably being cautious and would rather monitor the situation closely instead of jumping into a buying spree.
Index for iron ore 62% Fe fines fell by USD0.32 per ton, while the daily index for iron ore 65% Fe Brazil-origin fines decreased USD0.80 per ton.
QUOTE OF THE DAY
“Steel prices are down again and this is going to put a squeeze on mill margins, so most buyers are standing by the sidelines observing the market for now,” a mill source said.
PORT PRICES
Pilbara Blend fines traded around 875-893 Yuan per ton in Shandong province and Tangshan city during the day, compared with 870-895 Yuan per ton last Friday. The latest price range was equivalent to USD119.50-122 per ton CFR China in the seaborne market.
Report By: Encieh Arbabi
