Iron Ore Market in Brief: Seaborne prices with downward trend but still strong demand exist
Seaborne iron ore prices experienced some minor corrections on Thursday May 23 after jumping to more than USD105 per ton CFR China a day earlier, but Chinese steelmakers’ demand for the material remained strong.
Commodity | Price | Difference / MT |
MB 62% FE IRON ORE INDEX | USD 103.79 per tonne cfr Qingdao | -1.99 USD |
MB 62% FE PILBARA BLEND FINES INDEX | USD 101.98 per tonne cfr Qingdao | -1.99 USD |
MB 62% FE IRON ORE INDEX-LOW ALUMINA | USD 107.90 per tonne cfr Qingdao | -0.36 USD |
MB 58% FE PREMIUM INDEX | USD 95.25 per tonne cfr Qingdao | +0.05 USD |
MB 65% FE IRON ORE INDEX | USD 118.50 per tonne cfr Qingdao | -0.70 USD |
MB 62% FE CHINA PORT PRICE INDEX | 738 yuan per wet metric tone | +1 Yuan |
KEY DRIVERS
China’s steel futures weakened into negative territory during the day, while iron ore contracts managed to strengthen slightly. Spot iron ore trading at Chinese ports was more active on Thursday than it was a day earlier, and transaction prices were stronger.
Although steel mills still needed material to consume, the quick rise in seaborne prices, as well as the higher exchange rate between the Yuan and the United States dollar, made it cheaper for mills to buy iron ore from ports.
The Yuan was trading at 10 Yuan to USD1.442 on May 23, compared with 10 yuan to USD1.448 on May 16, and 10 Yuan to USD1.490 on April 23. A mill source in eastern China expected seaborne iron ore prices to be supported until the first half of July because of supply disruptions and decent margins for mills in China.
“The iron ore market dynamics have left me a bit confused recently,” he said. “Supply has been an issue but the tightness is expected to ease.” A trader source attributed the strength in iron ore prices to low inventories at Chinese mills, and to strong demand, emphasized by China’s steel output so far this year.
“Availability of mid-grade ores is not ample at Chinese ports, but prices of low-grade materials, especially low-alumina cargoes, remain supported,” he added. A major Metals Group is keeping its downward price adjustments unchanged for June shipments of its 56.5% Fe Super Special fines and 58.2% Fe Blend fines, at 11% and 8% respectively. But it reduced them to 3% and 2% respectively for 60.1% Fe Western Pilbara fines and 57.3% Fe Kings fines, both down from 4% for May shipments, according to sources. Daily MB 62% Fe Iron Ore Index fell by USD1.99 per ton on Thursday while the 65% Fe Iron Ore Index dropped by USD0.70 per ton from the previous day.
QUOTE OF THE DAY
“While demand for lower grade iron ore remains not bad, the narrow price gap between Blend fines and Super Special fines has encouraged mills to use more of the former,” a mill source in northern China said.
Report By: Naeemeh Ferdowsi
