Seaborne iron ore prices went down on Tuesday May 11 due to less market liquidity and weakened sentiment amid China’s Dalian Commodity Exchange’s risk notice, sources said.
Fastmarkets iron ore indices ***
۶۲% Fe fines, cfr Qingdao: $۲۲۸٫۹۳ per tonne, down $1.63 per tonne
۶۲% Fe low-alumina fines, cfr Qingdao: $۲۲۹٫۸۱ per tonne, down $2.80 per tonne
۵۸% Fe fines high-grade premium, cfr Qingdao: $۲۰۰٫۰۷ per tonne, down $2.65 per tonne
۶۵% Fe Brazil-origin fines, cfr Qingdao: $۲۶۰٫۶۰ per tonne, down $2.40 per tonne
۶۳% Fe Australia-origin lump ore premium, cfr Qingdao: $۰٫۴۹۰۰ per dry metric tonne unit (dmtu), down $0.0100 per dmtu
۶۲% Fe fines, fot Qingdao: ۱,۶۶۲ yuan per wet metric tonne (implied 62% Fe China Port Price: $۲۴۳٫۱۴ per dry tonne), up by 5 yuan per wmt
Key drivers ***
The most-traded September iron ore futures contract on the Dalian Commodity Exchange (DCE) decreased during yesterday evening’s trading session but rebounded in the afternoon on May 11 before ending the day down by 1.5% day on day at 1,326 yuan ($207) per tonne.
The most-traded June iron ore forward-month swap contract on the Singapore Exchange (SGX) also decreased. By 6:14pm Singapore time, it had registered a decrease of $1.80 per tonne compared with Monday’s settlement price of $222.40 per tonne.
DCE issued a risk notice on Monday May 10 amid high volatility in commodity futures in recent days, which emphasizes the need to continue to step up its supervision to maintain market order.
The risk notice could depress sentiment in the futures market but the steel sector was still supporting iron ore prices, sources told Fastmarkets.
One trading source in southern China said strong steel prices could contribute to the narrowing decreases in iron ore futures while the physical trading in steel was strong despite cooling down a bit day on day, which allowed iron ore futures to recover from daily low levels.
Liquidity at Chinese ports weakened today after soaring prices in previous days had likely turned buyers away, although some market participants could be waiting for prices to stabilize before making any transactions, a trading source in northern China said.
One trading source in Singapore said demand for iron ore lump declined due to a lower price-performance ratio compared with other direct-charge material such as high-grade iron ore pellets, while the rainy season in China could affect the screening of lump so Chinese mills could cut their usage of lump.
The spread between iron ore lump and fines at Chinese ports was narrowing while the equivalent lump premium at Chinese ports, such as Rizhao and Caofeidian, were significantly lower than the current seaborne lump premium level so as a result, the trading source said, he expects a decrease in the seaborne lump premium.
Quote of the day ***
“Iron ore futures surged during yesterday night’s trading session so today some market participants could clear their long positions to profit from the historically high level to avoid the risks of the recent high volatility, which could result in a lower price today,” a trading source in Shanghai said.
Trades/offers/bids heard in the market
BHP, Beijing Iron Ore Trading Center, 90,000 tonnes of 60.8% Fe Mining Area C fines, traded at $218.20 per tonne cfr China, laycan June 1-10.
Rio Tinto, Globalore, 190,000 tonnes of 62% Fe Pilbara Blend fines, traded at the June average of a 62% Fe index plus a premium of $6.65 per tonne, laycan June 4-13.
Rio Tinto, Globalore, 170,000 tonnes of 62% Fe Pilbara Blend fines, traded at the June average of a 62% Fe index plus a premium of $6.80 per tonne, laycan June 7-16.
BHP, Globalore, 90,000 tonnes of 58% Fe Yandi fines, offered at the June average of two 62% Fe indices plus a discount of $6.70 per tonne, June arrival.
BHP, tender, 170,000 tonnes of unscreened 62% Fe Newman Blend lump, laycan June 16-25.
Vale, tender, 60,000 tonnes of 58.76% Fe Lump Ore Non-screened Guaiba, bill of lading dated April 26.
Port prices ***
Pilbara Blend fines were traded at 1,620-1,663 yuan per wmt in Shandong province, Tangshan and Tianjin city on Tuesday, compared with 1,630-1,660 yuan per wmt on Monday.
The latest range is equivalent to about $237-243 per tonne in the seaborne market.
Dalian Commodity Exchange ***
The most-traded September iron ore futures contract closed at 1,306.50 yuan ($204) per tonne on Tuesday, down by 19.50 yuan per tonne from Monday’s close price of 1,326 yuan per tonne.
Alex Theo in Singapore and Min Li in Shanghai contributed to this article.
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