Physical iron ore prices hold steady while futures moved up

02 January 2018

Physical trade for iron ore was largely subdued in the latter half of the week, after falling to USD 72 per tonne levels earlier in the week. Moreover, mixed sentiments crossed over to the physical markets from futures where iron and steel followed different trend.

Looking at the benchmark prices, Metal Bulletin’s 62% Fe Iron Ore Index ended the week at USD 72.61 per tonne CFR Qingdao. It was broadly unchanged since Wednesday. Similarly, Platts’ TSI iron ore index for 62%Fe fines closed at USD 72.90 per tonne CFR North China port.

Market participants are of the view that the iron ore price will record more upsides, as there are expectations that the Chinese steel mills will start restocking in the near term as the demand for steel remained robust also the cap production will go off by March 2018.

Futures trade

Iron ore futures jumped up mainly on the view that the Chinese mills will start restocking soon. Most traded iron ore contract on the Dalian Commodity Exchange was up 2.7% to 531.5 yuan per tonne on Friday. The surge on the final trading day of the year meant the futures posted an annual jump of 16.5%, the second straight yearly gain.

Among other future contracts of key raw materials for steelmaking at Dalian Commodity Exchange, the most traded coking coal contract rose 1.4% to 1,313 yuan a tonne and jumped 15% in the year of 2017, while coke stood almost steady at 1,979.5 yuan a tonne, up 35% for the year.

Looking at the steel futures at Shanghai Futures Exchange, the most active rebar contract depicted a gain of 0.8% to 3,794 yuan a tonne, on Friday’s closure. Rebar futures have surged 47% for 2017, another consecutive annual increment.