Prices surge on buyer bullishness with the lump premium Upwards Iron ore prices continued to take significant upward trend on Friday March 1st amid the raised optimism, represented by rising futures and steel prices, while the lump premium also picked up.
62% FE IRON ORE INDEX: $87.92 per MT CFR Qingdao, up by $2.63 per MT 62% FE PILBARA BLEND FINES INDEX: $87.32 per MTCFR Qingdao, up by $2.63 per MT 62% FE IRON ORE INDEX-LOW ALUMINA: $90.10 per MTCFR Qingdao, up by $3.13 per MT 58% FE PREMIUM INDEX: $77.85 per MT CFR Qingdao, up by $1.88 per MT 65% FE IRON ORE INDEX: $98.10 per MT CFR Qingdao, up by $2.70 per MT 62% FE CHINA PORT PRICE INDEX: 638 RMB per wet metric MT (implied 62% Fe China Port Price $84.96 per dry MT), up by 6 RMB per wmt. 63% FE AUSTRALIAN LUMP PREMIUM: $0.3700 per dry metric MT unit, up by $0.0400 per DMTU.
KEY DRIVERS
China’s ferrous futures soared across the board on Friday afternoon, with the benchmark iron ore contract leading the gains and ending 3.7% higher than the settlement level on Thursday. The country’s spot rebar and hot-rolled coil markets also showed increases of 20-60 RMB ($3-9) per MT. With steel demand for the spring season starting to become apparent, sentiment in the ferrous markets has improved, participants said. March and April 62% Fe iron ore contracts on the Singapore Exchange (SGX) traded almost USD 3 per MT higher on Friday.
Trading activity also picked up on the 65% Fe derivative contract, with 1,800 lots of March and April 2019 contracts traded at USD 98 and USD 97 per MT CFR China respectively. The premium for March-index-linked Capesize shipments of Pilbara Blend fines only edged upward, with a deal reported at USD 1.75 per MT, but the premium for Brazilian Blend fines jumped, with transactions taking place at USD 5.80-5.90 per MT, up from an estimated level of USD 4 per MT earlier this week, according to sources. Local authorities in northern China’s steel making hub of Tangshan have announced emissions-reducing measures to combat air pollution.
These include cuts in sintering and pelletizing production of 40-100%, and transportation restrictions in and out of ports and plants for the period March 1 to 8am on March 6. Sources said that these moves could also be related to China’s annual “two sessions” – the National People’s Congress (NPC) and Chinese People’s Political Consultative Conference (CPPCC). These showcase events are scheduled for March 3-5 in Beijing, which is adjacent to Tangshan. Although some local sources said that the measures have yet to be put in place, the seaborne iron ore lump premium has responded to the potential tightness in sintered ore.
A seaborne cargo of Newman lumps has changed hands at a much higher lump premium. The 62% Fe Iron Ore Index, rose by USD 2.63 per MT on Friday, while the daily 65% Fe Iron Ore Index increased by USD 2.70 per MT. The price movements were based on the visible market activity detailed below, which was included in the index calculation according to the published methodology. “After staying relatively inactive after the Chinese [Lunar] New Year, end-users will after all start to buy steel, and steelmakers will be purchasing raw materials,” a trader in Beijing said.
Report By: Encieh Arbabi
