Iron Ore Market in Brief: Seaborne prices surge to USD 93 per ton CFR
KEY MARKET DRIVERS
Physical iron ore prices raised further above the $90-per-ton-CFR mark on Wednesday April 3 amid bullish sentiment reflected in derivatives markets. China’s iron ore futures extended their upward momentum to rise for a fourth consecutive trading day on Wednesday, with the most-liquid May contract even hitting the daily trading limit of 6% in the afternoon before easing slightly.
The May contract price has reached its highest since March 2017. Iron ore derivatives on the Singapore Exchange also soared higher, with the April-June 62% Fe contracts increasing by around USD 3 per MT, and April-June 65% Fe contracts traded at USD 104.50 per MT CFR, up from USD100.25-102 per MT CFR on Tuesday. Limited spot seaborne iron ore supply from cyclone-hit Western Australia, as well as slowing shipments from rain-caught north Brazil, has continued to buoy market bullishness, according to sources.
There have also been reports of another bout of tropical low pressure forming in the sea near Western Australia and this could develop into a cyclone as it reaches Pilbara next week. The benchmark 62% Fe iron ore prices could be pushed up to USD100 per MT CFR China if a new cyclone lands and disrupts operations, some participants said. Rio Tinto and BHP are less likely to offer spot iron ore cargoes in the coming days or weeks because they would prioritize commitments to contract supply, a mill source in east China said. However, prices are unlikely to keep surging if no new supply disruption is confirmed, and could cool down next week, he added.
Fixed-price offers for seaborne cargoes of Pilbara Blend fines and Newman fines received no bids during the day, with buyers not daring to lock in the high prices in fear of downside risks. For index-linked pricing, a joint cargo of Pilbara Blend fines and lumps with laycan in mid-May traded at the May average of a 62% Fe index and its lump premium, plus an overall premium of USD 1.55 per MT, and June-delivery Capesize shipments of Pilbara Blend fines traded at premiums of USD 1.65-1.70 per MT, according to sources. The 62% Fe Iron Ore Index, published daily by Metal Bulletin, rose by USD 3.19 per MT on Wednesday, while the daily 65% Fe Iron Ore Index increased by USD 2.40 per MT.
QUOTE OF THE DAY
“Iron ore prices at Chinese ports rose further today, however the rise was not as much as that in the futures market, and trading volume fell from a high on Tuesday. This indicates mills are taking caution, but they may still need to stock up a bit ahead of the Tomb Sweeping Festival holiday during April 5-7,” quoted from a trader in east China.
Report By: Mohammad Reza Barakchian
