KEY MARKET DRIVERS
China’s ferrous futures recorded losses on Friday March 8 and largely sustained the downtrend on Monday, with the benchmark iron ore contract ending 3% lower than Friday’s settlement.
Iron ore swaps on the Singapore Exchange also dropped, with the March-May 62% Fe contracts shedding over USD 1 per MT. A number of deals closed for the March and April 65% Fe contracts, at prices of USD 94.40 per MT CFR and USD 93.10-94.50 per MT CFR respectively. The price declines could be blamed on a weaker outlook in China’s property market, as well as escalating production restrictions imposed on steelmakers in north China, according to market participants.
A procurement source with a major steelmaking company in north China told he was not looking to buy any spot cargoes because many of the mills are operating at reduced capacity. A few Chinese traders said they were reducing stock level rather than considering taking in any seaborne shipments given the illiquid market.
Port transaction prices for Pilbara Blend fines fell significantly during the day, with one seaborne cargo not finding a buyer despite the offer price being lowered to USD 83 per MT CFR. Seaborne shipments of Mining Area C fines and Jimblebar fines traded at narrower discounts based on April-average indices, however, due to their cost effectiveness compared with the robustly-priced Fortescue Blend fines and Super Special fines, market participants said.
Transaction prices for the latter two lower-grade brands only recorded slight losses at Chinese ports on the day. The daily 62% Fe Iron Ore Index, fell USD 1.98 per MT on Monday, while the daily 65% Fe Iron Ore Index dropped by USD 3.20 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.
For the calculation of the indices, judgment was applied to carry over data in today’s indices due to low liquidity in the 24-hour pricing window, corresponding with published fall-back measures.
QUOTE OF THE DAY
“Recent production limitations imposed on mills in China [are likely to have] prompted the dip in demand for iron ore, leading to weaker prices,” a Singapore-based trader told.
