Iron Ore Market in Brief: Seaborne prices rise on anticipation of looser production restrictions in Tangshan
Seaborne iron ore prices rose on Tuesday July 30 on news that production restrictions on steelmakers in northern China over August are likely to be relaxed.
Commodity | Price | Difference / MT |
MB 62% FE IRON ORE FINES INDEX | USD 119.61 per ton CFR Qingdao | +1.62 USD |
MB 62% FE PILBARA BLEND FINES INDEX | USD 119.53 per ton CFR Qingdao | +1.62 USD |
MB 62% FE IRON ORE INDEX-LOW ALUMINA | USD 120.89 per ton CFR Qingdao | +1.68 USD |
MB 58% FE PREMIUM INDEX | USD 106.47 per ton CFR Qingdao | +0.68 USD |
MB 65% FE IRON ORE INDEX | USD 128.00 per ton CFR Qingdao | +2.20 USD |
MB 62% FE CHINA PORT PRICE INDEX | 893 Yuan per wet metric ton | +8 Yuan |
KEY DRIVERS
Market participants believe the market was more bullish after it was heard that production restrictions for steelmakers in the hub of Tangshan over August would be less strict compared with those imposed over July. Several domestic media outlets reported that Tangshan’s Ecology & Environment Department had drafted a less stringent set of production curbs to be imposed on steelmakers for next month.
Seventeen mills in Tangshan will be exempted from any restrictions, two mills will need to cut their blast furnace production rates by 50% and 14 mills must lower theirs by 30%, according to the draft being circulated. For July, six mills were ordered to cut operating rates of their blast furnaces and converters by a fifth. One mill was allowed to operate normally over July 1-15 and three others were permitted in the second half of the month, while all remaining mills had to cap production at their blast furnaces and converters at 50%.
“The restrictions in Tangshan for August seem to be more focused on sintering for now,” a mill source said. As a result, some steel mills have shown more buying interest and this is lending support to iron ore prices. Additionally, the ports of Jingtang and Caofeidian were heard to have resumed trucking activity after an earlier ban on trucking activity within the ports was lifted as of 8pm on Monday July 29. This is further increasing buying interest in iron ore, according to trade sources.
In turn, the Chinese iron ore futures contracts climbed upon re-opening after the midday break, and trended firmly toward the afternoon close. There was a similar upward trend for the 62% Fe derivative contract on the Singapore Exchange (SGX), with the August contract close to USD3 firmer at USD117.13 per ton, from the previous day’s closing price of USD114.15 per ton. Index for iron ore 62% Fe fines rose by USD1.62 per ton, while the daily index for iron ore 65% Fe Brazil-origin fines increased by USD2.20 per ton.
QUOTE OF THE DAY
“August environmental restrictions seem more relaxed for now, with most of it focused on sintering instead, this has lifted buying interest from mills for now,” a mill source said.
PORT PRICES
Pilbara Blend fines traded around 881-900 Yuan per ton in Shandong province and Tangshan city during the day, compared with 875-893 Yuan per ton a day earlier.
Report By: Parya AhmadPour
