Iron Ore Market in Brief: seaborne iron ore prices rebound to approximately USD 85
On Friday August 30, physical iron ore prices rose on news implying China was willing to process with negotiations to resolve its trade war with US.
Commodity | Price | Difference / MT |
MB 62% FE IRON ORE FINES INDEX | USD 84.66 per ton CFR Qingdao | +3.19 USD |
MB 62% FE PILBARA BLEND FINES INDEX | USD 85.04 per ton CFR Qingdao | +3.19USD |
MB 62% FE IRON ORE INDEX-LOW ALUMINA | USD 82.69 per ton CFR Qingdao | +2.49 USD |
MB 58% FE PREMIUM INDEX | USD 73.84 per ton CFR Qingdao | +3.55 USD |
MB 65% FE IRON ORE INDEX | USD 92.10 per ton CFR Qingdao | +2.20 USD |
MB 62% FE CHINA PORT PRICE INDEX | 701 Yuan per wet metric ton | +3 Yuan |
KEY DRIVERS
Seaborne iron ore prices recovered as analysts believe that the sudden surge in trading activity have most probably been prompted by news implying China did not wish to escalate the trade war with US.
According to local news agencies, late on August 29 Chinese officials claimed that they were “willing to negotiate and collaborate to solve this problem with a calm attitude.”
Also earlier due to a threatened roll out claiming US duty increased from 10% to 15% on USD 300 billion of China products, beginning on September 1, market participants preferred to wait on the market sidelines, prompting a slump in iron ore prices for most of the past week.
According to the Chinese officials China would not react on the new tariffs, instead they would immediately concern negotiating on the removal of new tariffs imposed on USD 550 billion of Chinese goods.
Moreover, a Chinese trader said that there had been a degree of stockpiling of iron ore by some steel mills ahead of the impending winter production restrictions, and this could also have contributed to the increase in prices.
Friday’s market rebound may also be attributed to the positions traders took in China. China’s iron ore futures showed a rise late on Thursday, going up by around 1.6%, while steel futures also showed gains of 0.4-0.5%.
The benchmark January iron ore contract remained largely steady for the Friday morning trading session, showing an uptrend just before the midday break, which eventually rose to 4% at the end of afternoon trading session.
Another trader source said that while she was still waiting for clarity on the steelmaking restrictions that were expected to be rolled out this month in Tangshan, the small rise in iron ore prices may be attributed to the approaching healthy season for downstream markets in September and October.
But a few iron ore futures and physical cargo traders warned that the rise in prices on Friday may not last long, because demand for iron ore was likely to reduce slightly with the restrictions in Tangshan, while another factor was the growing inventories at Chinese ports.
Inventories at the 45 ports in China totaled 121.31 million MT for the week of August 23-29. This was up by 1.2% or 1.47 million MT from the previous week, while it was still down by 17.7% year-on-year, or 26.01 million MT, from 147.33 million MT.
Spot iron ore trading activity at Chinese ports progressed in the afternoon, alongside the uptrend seen in futures, but prices remained rangebound in comparison with Thursday.
QUOTE OF THE DAY
“Some traders probably felt that the wide gap between port prices and seaborne cargoes could be an opportunity to make some money, prompting stronger buying interest in the market today,” a
trader said.
PORT PRICES
Pilbara Blend fines were traded around 700-715 Yuan per MT in Tangshan city and Shandong province on Friday, equivalent to USD 91.10-93.20 per MT CFR China in the seaborne market..
DALIAN COMMODITY EXCHANGE
The most-traded January iron ore futures contract closed at 607.50 yuan per MT on Friday, up by 27.50 yuan per MT from Thursday’s closing price.
Report By: Javad Najafi
