Iron Ore Market in Brief: Prices slip amid futures, steel declines
Physical iron ore prices stayed range-bound on Tuesday April 23 while the 65% Fe derivative on the Singapore Exchange traded actively.
KEY DRIVERS
China’s steel and iron ore futures have all been weak since Tuesday night, with the benchmark contracts ending Wednesday 0.9-1.6% lower than Tuesday’s settlement levels. The country’s spot rebar and hot-rolled coil prices also fell 10-50 Yuan (USD 1.50-7.40) per MT in the day. Spot iron ore trading activity at Chinese ports remained “not bad” during the day, with mills continuing to restock for the May 1-4 Labor Day public holiday, market participants said.
However, a steelmaker source in east China said mills had largely finished their restocking and said they were being cautious over further buying, based on a pessimistic outlook on steel sales.
While prices for some mid-grade Australian fines softened notably, those for high-grade Iron Ore Carajas and low-grade Super Special and Blend fines were relatively steady, because
many Chinese steelmakers are preferring the high+low grade combination in production, sources said.
Prices for low-alumina ore, including Iron Ore Carajas, Brazilian Blend and Yandi fines have outperformed materials with higher alumina content, a trader in Shanghai told. This stems from Chinese mills’ leaning on productivity given the handsome steel profit margins achievable at the moment and the relative tightness in tradable supplies of those products, the trader said. Nevertheless, if steel prices and profitability wane when the rainy season arrives in east China in June, the preference for a high-low mix could end, he added. Daily 62% Fe Iron Ore Index fell USD 0.98 per MT on Wednesday, while the 65% Fe Iron Ore Index decreased by USD 0.60 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.
QUOTE OF THE DAY
“Port prices for Australian fines have ranged from stable to moderately lower over the past two days, but iron ore lump prices have slightly strengthened, with some deals done at levels close to pellet prices,” a China-based mill source told.
Report By: Shahriyar Yusefi
