Sea-borne iron ore steadies around $78 per tonne mark

15 January 2018

Spot prices for iron ore in the seaborne market were range bound this week due to damped buying interest primarily triggered by narrowing steel margins. Market participants also indicated that the impact of the disruption attributed to a cyclone in Australia is not as anticipated on supplies.

Looking at the benchmark prices, at closing on Friday i.e. 12^th January 2018 Platts assessed the 62% Fe IODEX & TSI Iron Ore Fines at $73.30/dry mt CFR North China Friday, up 65 cents/dmt. Moreover, TSI 58% Fe Fines, 1.5% Al, CFR Qingdao port closed at $63.05/dmt. Both the indices depicted a decline of $1.05/dmt for the day.

Seemingly, the sea-borne iron ore couldn’t find much support from steel fundamentals which could be observed as the rally seen in past few days was short-lived. Also, increased inventory at the Chinese ports brought bearishness to the trade in form of waned interest from the buyers.

Futures market

Paper trade was broadly in red on Friday as Chinese steel futures posted their biggest daily loss in one month after gaining for three straight days as cooling winter demand dented prices and weighed on iron ore, the key steelmaking raw material.

In Steel, the most active rebar contract on the Shanghai Futures Exchange dropped 1.6 percent to 3,790 yuan ($585.60) a tonne on Friday, its biggest loss since 13^th December. It edged up 0.4 percent during the week.

Among raw materials, iron ore contract on the Dalian Commodity Exchange dropped 2.1 percent to 544 yuan a tonne. It ended the week 1.5 percent up. Coke slipped 0.7 percent to 2,011 yuan a tonne and coking coal fell 1.4 percent to 1,345.5 yuan a tonne, respectively.

Swelling imports

Meanwhile, China’s iron ore imports once again crossed 1 billion tonne mark for 2017. Despite of subdued imports in December (84.3 million tonnes), the overall imports by the world’s biggest consumer of iron ore stood at 1.075 billion tonnes, exceeding 1 billion tonnes for a second year.

Demand for iron ore has been robust this year as the Chinese steel mills have increased production on the back of a strong recovery in steel prices that has pushed profits to the highest in about two decades. Chinese steel prices have nearly tripled from their lows in late 2015. Steel prices in China have surged 46 percent last year, while iron ore prices jumped 16 percent.