Iron Ore Market in Brief: Prices dip on futures, steel losses, Pilbara Blend premium still strong
Physical iron ore prices dropped back on Monday June 17 after staying above USD110 per ton CFR last Thursday and Friday, but premiums remained robust for Pilbara Blend fines.
Commodity | Price | Difference / MT |
MB 62% FE IRON ORE INDEX | USD 108.21 per ton cfr Qingdao | -2.09 USD |
MB 62% FE PILBARA BLEND FINES INDEX | USD 107.01 per ton cfr Qingdao | -2.09 USD |
MB 62% FE IRON ORE INDEX-LOW ALUMINA | USD 110.75 per ton cfr Qingdao | -3.46 USD |
MB 58% FE PREMIUM INDEX | USD 99.67 per ton cfr Qingdao | -2.07 USD |
MB 65% FE IRON ORE INDEX | USD 122.20 per ton cfr Qingdao | -1.50 USD |
MB 62% FE CHINA PORT PRICE INDEX | 817 yuan per wet metric ton | -10 Yuan |
KEY DRIVERS
China’s Dalian Commodity Exchange announced late last Friday that it will be raising the daily trading limit from 6% to 8% and the minimum trading margin from 8% to 10% for the September iron ore futures contract from settlement on Tuesday June 18. These are understood to be measures to cool down the potential overheat of the iron ore contract.
China’s iron ore and steel futures retreated in the night session last Friday and largely stayed weak on Monday, with the benchmark contracts losing 1.5-2.4% compared with Friday’s settlement levels. Spot rebar and hot-rolled coil prices in China also have fallen 30-100 Yuan (USD4.33-14.44) per ton since Friday.
Spot iron ore trading slowed down at Chinese ports, with some sellers lowering their offer levels, while buyers and other sellers largely stayed out of the market. Chinese mills are unlikely to pay high prices for iron ore and other raw materials, given the narrower or even negative margins available to them at the moment.
One miner was heard to have sold an index-linked Capesize cargo of Pilbara Blend fines - to be loaded in the first half of July - at a premium of USD4.65 per ton, up from Friday’s traded premium of USD4-4.50 per ton. Although sellers in the secondary market may not easily fetch a premium above USD4.50 per ton for such shipments, early-Julyloading cargoes are scarce now and thus likely to be priced higher, a trader in east China said.
Daily MB 62% Fe Iron Ore Index fell USD2.09 per ton, while the daily MB 65% Fe Iron Ore Index decreased by USD2 per ton.
QUOTE OF THE DAY
“Iron ore inventories at Chinese ports will continue to slide [because] demand for iron ore is still healthy from the steel mills, which has supported the recent price surge. However, steel mill profit margins are likely [to be] squeezed again due to the dip in steel product prices,” a Singapore-based trader said.
Report By: Shahriar Yusefi
