Iron Ore Market in Brief: Prices rebound amid futures gains, BHP maintenance news
Seaborne iron ore prices picked up on Wednesday May 15 following gains in China’s futures market, and amid concerns that BHP’s mine maintenance could affect supply at a later date.
Commodity | Price | Difference / MT |
MB 62% FE IRON ORE INDEX | USD 96.95 per tonne cfr Qingdao | +2.61USD |
MB 62% FE PILBARA BLEND FINES INDEX | USD 95.63 per tonne cfr Qingdao | +2.61USD |
MB 62% FE IRON ORE INDEX-LOW ALUMINA | USD 98.53 per tonne cfr Qingdao | +0.97 USD |
MB 58% FE PREMIUM INDEX | USD 85.64 per tonne cfr Qingdao | -0.36USD |
MB 65% FE IRON ORE INDEX | USD 112.10 per tonne cfr Qingdao | +2.70USD |
MB 62% FE CHINA PORT PRICE INDEX | 686 yuan per wet metric tonne | +4 Yuan |
KEY DRIVERS
The Australian miner BHP has told its customers that it will conduct equipment maintenance in the first half of July, which will probably delay shipments of its 62.4% Fe Newman fines, according to sources. Some market participants stated late last month about the overhauls affecting Newman products. These will be undertaken partly to repair any damage after Cyclone Veronica struck late in March, and partly as routine work after BHP’s financial year ends in June.
BHP’s Newman mine produced 15.6 million tons of iron ore in the January-March quarter this year, on its 85% stake basis. This was equivalent to 18.4 million tons on a 100% basis, according to its quarterly production report.
Such a volume is not enough to affect the general seaborne iron ore market, a trader in eastern China said. But there could be market speculation resulting from this news that will push up prices, given the generally tight supply-demand balance since shipments from Australia and Brazil have been reduced in recent months by weather issues and the accident at a Vale-operated tailings dam, sources said.
China’s ferrous futures advanced across the board during the day, especially in the last 30 minutes of trading before the 3pm close. The country produced 85.03 million tons of crude steel in April, up by 12.7% year-on-year, according to its National Bureau of Statistics. This equates to a daily output of 2.83 million tons, which is an all-time high.
China’s spot steel markets also improved during the day, with prices becoming firmer, sources told. While 62% Fe iron ore transaction prices at Chinese ports largely edged upward in the day, the seaborne market saw a cargo of Mining Area C fines and a Panamax shipment of Iron Ore Carajas traded at stronger prices.
For June-index-linked Capesize shipments of Pilbara Blend fines and joint cargoes of PB fines and lumps, traded premiums were about USD 2.10 and USD 1.90 per ton respectively, according to market participants. Daily MB 62% Fe Iron Ore Index rose by USD 2.61 per ton, while the daily MB 65% Fe Iron Ore Index increased by USD 2.70 per ton.
QUOTE OF THE DAY
“While steel output remains high and margins narrow with recent declines in steel prices, we are preparing to look for some cheaper iron ore cargoes to control production costs,” a mill source in eastern China told.
Report By: Mehrdad Najafi
