Iron ore prices increase after futures rise amid better demand hopes

Import iron ore prices in China have indicated increases today, Thursday, May 16, while iron ore futures prices have moved up by 2.56 percent on the same day compared to yesterday, following news that China may implement a program of liquidation of home inventories to support the property market.  

Iron ore fines with 62 percent Fe content have seen a rise of $2.95/mt on May 16 to $116.45/mt CFR. This level is $0.55 /mt above that seen on May 9. Brazilian iron ore with 65 percent Fe content has increased by $2.45/mt on May 16 to $132.3/mt CFR, while up $0.3/mt week on week, SteelOrbis has learned.

14 deals for a total of 399,000 mt of iron ore were transacted on May 16 at the Corex platform. In particular, 170,000 mt of 62 percent PB fines have been traded at the July 62 percent index + $1.4/mt, for laycan during June 28-July 7, while 85,000 mt of 65 percent Carajas fines have been sold at $132.3/mt CFR for delivery during June 13-22.   

During the given week, import iron ore prices declined first, while they have posted increases on Thursday, offsetting the previous decreases, while lump prices are stronger than fines prices. Lately, the deliveries of iron ore to ports have shifted from a decline to a rising trend, with the inventory levels higher than the same period last year, exerting a negative impact on iron ore prices and preventing them from recording excessively sharp increases.

Steelmakers’ molten iron outputs have increased more than expected as some blast furnaces resumed production in advance, resulting in firm demand for iron ore. China has announced it will issue ultra-long special sovereign bonds in 2024, aiming to support the real economy, a move which has also provided support for iron ore prices. Also, news has emerged from Bloomberg that China is considering a program for local governments to buy unsold buildings from distressed developers, aiming to cut inventories in the property market. Though the performance of the real estate industry remains very weak, this development has improved the outlook somewhat. It is thought that import iron ore prices in the Chinese market will likely see a fluctuating trend with a slight positive bias in the coming week.

Iron ore futures prices at Dalian Commodity Exchange have increased by 2.56 percent today to RMB 881/mt ($124/mt) compared to the previous trading day, May 15, while increasing by RMB 15.5/mt ($2.2/mt) compared to May 9.

As of May 16, rebar futures at Shanghai Futures Exchange are standing at RMB 3,703/mt ($517/mt), increasing by RMB 34/mt ($4.8/mt) since May 9, while up 2.38 percent compared to the previous trading day, May 15.

Imported iron ore prices in China (week-on-week basis)

Price includes VAT.  

Nationwide iron ore concentrate prices (66 percent Fe)

Price includes VAT. 

$1 = RMB 7.102