Iron Ore market in Week Ending to Feb 8th 2019
Iron ore prices raise due to expected shortage:
Monitoring the market, seaborne iron ore prices rally has been progressively boosted by stronger derivatives’ market performance and the expected deficiency in supply.
The Platts has evaluated the Fe 62% Iron Ore index at USD 94.2/DMT CFR North China, with a positive USD 3.70/DMT fluctuation on the day. The upcoming month TSI swap was a positive USD 3.30/DMT on the day at USD 91.45/DMT.
Traders who have Australian Fine cargo do NOT have any plans to offer in near future as they stated they do not intend to sell at a very low price or offer unreasonable prices. They believe it is better to wait for a stable market.
It is anticipated due to steel margin moving into negative after the current iron ore rally, the spreads between Fe 65% and Fe 62% shall get narrow soon. As quoted by a steel mill source, the steep prices cannot catch up with iron ore price after Chinese Lunar New Year holiday and its margin are already unsteady.
When negative steel margin occurs, mills prefer using low-grade fine in blast furnaces to yield less pig iron. It is said that Chinese steel mills would rather consume from their inventories from ports prior to looking to purchase seaborne ore. They may also take the chance of the rise in iron ore price to push up steel prices which have been depressed.
Sources have expected the lump premium to stay steady as there is limit in choice and it is far from expectations that steel producers make changes to their ratios in near term.
Report By: Mehrdad Najafi
