Iron Ore Market in Brief: Prices change little while futures dip, but port trading active
Physical iron ore prices were range bound on Thursday April 25 while futures transactions rose early in the day and fell later, to end moderately lower overall.
KEY DRIVERS
China’s benchmark ferrous futures contracts all advanced during Thursday morning trading, then retreated in the afternoon, ending below the settlement levels seen a day earlier. Market participants attributed the afternoon drop to a set of industry data released by a local data provider, showing that steel output increased while there was a smaller-than-expected fall in steel inventory over the past week.
“The data could point to a situation in which steel demand has peaked but supply keeps rising,” a trader in Beijing said. Robust steel production is holding up iron ore demand and prices, however, a mill source in eastern China told. While iron ore shipments from Australia have largely recovered from the disruptions caused by Cyclone Veronica last month, those from Brazil were still way under at normal levels, which was also supporting prices on the supply side, he said.
Chinese mills’ persistent restocking of iron ore from the port market ahead of the Labor Day public holiday on May 1-4 helped to maintain port trading activity during the day. This was in spite of news heard during the day that authorities in northern China’s steel hub of Tangshan have decided to extend the 40-100% sintering restriction on local steelmakers to April 30 from April 25. This could reduce consumption of iron ore fines while increasing that of lumps and pellets during that period.
Meanwhile, seaborne iron ore transactions remained thin despite offers and bids tabled on trading platforms and in the spot market. Separately, Anglo American produced 9.5 million tons of iron ore from its Kumba operations in South Africa in the January-March quarter, down by 12% year on year and also 6% lower than in the October-December quarter, according to a production update published on Thursday.
The miner attributed the drop to plant maintenance work at its Sishen and Kolomela mines. Anglo has kept its 2019 production target unchanged, however, at 43-44 million tons for Kumba. At the miner’s Minas Rio operations in Brazil, which restarted last December after being suspended for the most of 2018, output totaled 4.9 million WMT in January-March, up by 61% from a year earlier and compared with 227,000 WMT in the preceding quarter. Anglo still expected to produce 18-20 million WMT from Minas Rio in 2019.
The 62% Fe Iron Ore Index, fell by USD 0.05 per ton, while the daily 65% Fe Iron Ore Index went down by USD 0.10 per ton. 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
“Iron ore lumps are fetching stronger prices at Chinese ports, thanks to relatively low stockpiles and the continuing sintering restrictions in Tangshan. I believe pellets will soon attract buyers if lump prices continue to rise,” a China-based trader told.
Report By: Mehrdad Najafi
