Iron Ore Market in Brief: Seaborne prices pass USD 100 for the first time after May 2014
Physical iron ore markets continued to strengthen on Friday May 17 with the seaborne price breaching USD 100 per ton CFR China for the first time in five years, amid a bullish performance by futures.
Commodity | Price | Difference / MT |
MB 62% FE IRON ORE INDEX | USD 101.71 per tonne cfr Qingdao | +2.50 USD |
MB 62% FE PILBARA BLEND FINES INDEX | USD 99.90 per tonne cfr Qingdao | +2.50 USD |
MB 62% FE IRON ORE INDEX-LOW ALUMINA | USD 104.48 per tonne cfr Qingdao | +1.68 USD |
MB 58% FE PREMIUM INDEX | USD 92.12 per tonne cfr Qingdao | +3.02 USD |
MB 65% FE IRON ORE INDEX | USD 115.60 per tonne cfr Qingdao | +2.10 USD |
MB 62% FE CHINA PORT PRICE INDEX | 716 yuan per wet metric tonne | +19 Yuan |
KEY DRIVERS
China’s iron ore futures continued to lead the gains in the ferrous field, with the benchmark September contract ending the week 5.4% higher than the settlement a day earlier, while the January contract even hit the daily trading limit of 6% in the afternoon and closed at that level.
Iron ore stockpiles at 45 major Chinese ports totaled 132.07 million tons on Friday, down by 1.24 million tons from a week earlier, to the lowest since October 2017, according to a local data provider. “Otherwise, there seems to be no major fresh news that could justify a further surge [in prices] today, which is totally beyond our expectations,” a mill-affiliated trading source in Beijing told.
Separately, there was a flooding accident on Friday morning at an iron ore mine in northeastern China’s Heilongjiang province, where rescue work continues while production is suspended. The mine has capacity for nearly 1 million tonnes per year of iron ore concentrate, according to sources. There could be some supply issues for customers of the mine, but the ultimate effect on the iron ore market will be limited, they added.
Spot transaction prices at Chinese ports rose on Friday in line with the advance in futures during the day, with higher prices in the afternoon than in the morning. But trading volumes cooled down with the weekend approaching and buyers being more cautious about the jump in prices. In the seaborne market, two index-linked deals were reported on platforms or via miner tender, while fixed-price offers and bids failed to reach common ground.
Although steelmakers’ margins have been squeezed by increasing iron ore and coke costs, while steel prices have not risen by much, the current profit level of around 500 Yuan (USD72) per ton continued to back the prices of iron ore products, especially those with low alumina content, participants said. Daily MB 62% Fe Iron Ore Index rose by USD2.50 per ton, while the daily MB 65% Fe Iron Ore Index increased by USD2.10 per ton.
QUOTE OF THE DAY
“Steel demand is still intact, with mill production at an all-time high. Coupled with a growth in new projects in China’s real estate industry, these factors have lent support to the rise in iron ore prices recently,” a Singapore-based trader said.
Report By: Encieh Arbabi
