Spot iron ore saw some upsides mainly supported by gains Chinese futures: KATM Exclusive

2-exclusive

Spot iron ore prices rose above $62 per tonne (CFR China) on Friday (20^th October) supported by the strong gains in China’s ferrous futures market. Metal Bulletin’s 62% Fe Iron Ore Index closed at $62.46 per tonne CFR Qingdao, on Friday. This came after the prices fell to a week low on the day before, to $60.88 per tonne.

Overall, the fundamentals have improved a bit as seen from the buying appetite of the Chinese, wherein both port based and sea-borne iron ore saw some upsides. Steel fundamentals lent support to the iron ore as world’s largest steel producer looks to cut output.

Futures lending support

Iron ore futures jumped around 5% on Friday, getting a boost from a rally in steel prices on expectations of more production cuts as China intensifies its smog war over winter. The most traded iron ore contract for January delivery at Dalian Commodity Exchange closed 5.4% higher at 469 yuan ($71) a tonne, after sliding 3.4 percent on Thursday.

Moreover, the most active January rebar contract at Shanghai Futures Exchange rose 4.3% to 3,776 yuan per tonne, helping the gains across the supply chain of steel.

Furthermore, other key steelmaking raw materials saw gains at Dalian Commodity Exchange, with major trading contracts of coking coal recording an increase of 2.9% to 1,152.50 yuan per tonne and coke climbed 2.5% to 1,762.50 yuan per tonne, on Friday.

China’s steel output fell in September

Chinese steel production fell 3.7% on the month in September to a seven month low of 71.83 million tonnes, while on a daily basis it was 0.5% lower, as per the data from National Bureau of Statistics.

Furthermore, the output is expected to fall more in October as the steel mills in Tangshan were ordered to cut sintering output by half, earlier in the month. However, this is likely to support the pellet imports by the Chinese.