Iron ore prices climb amid strong demand for mid-grade fines, supply concerns

Wednesday, 25 March 2020 17:43:31 (GMT+3)   |   Istanbul
       

The price increases in the iron ore market have continued today, Wednesday, March 25, as Chinese customers have been showing firm demand, while supply concerns have been rising. Prices for iron ore with 62 percent Fe content have gained $3/mt today to $86.5/mt CFR, while fines with 65 percent Fe have increased by $3.6/mt to $105.8/mt CFR, SteelOrbis has learned.

There have been four deals signed over the day for 510,000 mt in total (they are in the table below).

Product

Volume

Price

Pilbara fines 61% Fe

170,000

$84.71/mt CFR

Pilbara fines 61% Fe

170,000

$85.3/mt CFR

Newman fines 62.4% Fe

90,000

$87/mt CFR

Mac fines 60-61% Fe

80,000

April index - $1.55/mt

More deals at fixed prices are indicating Chinese buyers’ intention to secure needed volumes as iron ore supply flow is going to decline, according to traders. As SteelOrbis reported earlier, Vale has suspended operations and shipments from its Malaysian asset, which focused on production of Brazilian blended fines with 62 percent Fe and low alumina content. Moreover, the South African lockdown will temporarily stop supply from Kumba Iron Ore, which ships mid-grade fines and has a big share of lumps in its total production volume. Trading from Chinese ports has also been healthy today.

Iron ore futures at Dalian Commodity Exchange have increased by RMB 32/mt ($4.5/mt) today to RMB 665/mt ($93.8/mt), reflecting positive sentiment for the near future.

Nevertheless, the forecast for the longer perspective is not so bright and analysts expect iron ore prices to weaken in the second half of 2020. "We are not yet looking at a glut of seaborne iron ore. But risks are escalating, and the balance is tilting towards a bigger hit to iron ore demand than supply," said Wood Mackenzie research director Paul Gray. Wood Mackenzie has set its first quarter price forecast at $85/mt CFR, but added that the price outlook for the whole year ($80/mt CFR) could be lowered.


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