Sea-borne iron ore trends higher : KATM Exclusive

18 December 2017

In China, the spot prices for sea-borne iron ore moved past $71 per tonne CFR China after a surge in the number of transactions involving higher grade materials. Market remained relatively desirable and transactions were mainly concluded among medium and high grade iron ore.

On Friday, Metal Bulletin’s 62% Fe Iron Ore Index closed at $71.50 per tonne CFR Qingdao, up by $1.56 per tonne. On Thursday, Metal Bulletin’s 62% Fe Iron Ore Index was at $69.94 per tonne CFR Qingdao.

Market participants expect China’s crude steel output to continually fall in the month of December, as the winter steel output cuts in northern and eastern China ramp up from mid-November into December.

Iron ore and steel futures

Futures seemingly cut losses and rebounded from a one-week low, supported by tighter supply due to government imposed production curbs as part of a campaign to rein in pollution during winter.

At Shanghai Futures Exchange, the most traded iron ore contract for delivery in May closed up 0.1% at 3,824 yuan ($579) a tonne, after recording a day’s low of 3,770 yuan per tonne.

At Dalian Commodity Exchange, the iron ore contract rose 1.4% to 508 yuan a tonne and coke jumped 1.7% to 2,056 yuan. Both commodities slid on Thursday, with coke dropping more than 4%.

Crude steel production

China’s National Bureau of Statistics data showed that the country’s crude steel output was 66.15 million tonnes in November, down by 8.6% month-on-month but up by 2.2% on year. The figure was the second lowest monthly output for this year since February which came at 61.11 million tonnes. In the period of January-November, China’s crude steel output totalled 764.80 million tonnes, up 5.7% year-on-year.

Moreover, the daily crude output for November averaged at 2.205 million tonnes, down 5.5% from that in the month of October. This was the third month in a row that the daily output figure declined on a monthly basis.

Steel trade

General Customs of Administration data depicted that country’s steel exports rose from the previous month to 5.35 million tonnes in November. However, the steel exports fell sharply from 8.12 million tonnes a year ago. Year-to-date exports fell 30.7% to 69.83 million tonnes on-year.

November’s steel imports in China rose to 1.14 million tonnes from 0.95 million tonnes in October, but total January-November imports stood almost steady at 12.1 million tonnes compared with 12.02 million tonnes a year ago.