Iron ore prices surge closer to $140/mt CFR amid supply issues, demand

Import iron ore prices for China indicate a significant increase as of today, Thursday, December 3, rising by $7.9-8.5/mt compared to November 26. The latest increase on  Wednesday, December 2, was due to the recent announcement of the largest iron ore producer Vale of its reduced output target.  

Iron ore fines with 62 percent Fe content have edged up by $1.4/mt today to $137.4/mt CFR, while rising by $7.9/mt week on week. Brazilian iron ore with 65 percent Fe has risen by $1.5/mt on the same day to $148.5/mt CFR, up by $8.5/mt week on week, SteelOrbis has learned.

A contact for 80,000 mt of 63 percent Fe content Newman lumps was concluded at the January 62 percent Fe index + $0.142/mt. Also, 170,000 mt of Pilbara fines have been traded at the January index + $5/mt. Demand has been active at Chinese ports, with a trade of 30,000 mt of 61.73 percent Fe content PB fines done at a price of RMB 916/mt ($139.7/mt), at Tianjin port.

Vale said this week that its iron ore output should total 300-305 million mt this year, lower than the 310 million target the company set earlier. Production is expected to improve to 315-335 million mt in 2021. The predicted production for 2021 is also below the expectations of market participants. Worries about lower supply volumes from Brazil by the end of December and in January have supported spot prices.

During the given period, the volumes of iron ore supplies arriving at Chinese ports and iron ore shipments have not indicated big changes, while bullish sentiment has prevailed among market players, which positively affected iron ore prices. Currently, Chinese steelmakers’ profits have been quite good, while their profits will likely shrink following the rapid rises in iron ore prices. It is thought that iron ore prices may fluctuate within a limited range in the coming week amid slackening demand during the cold winter season.

Iron ore futures prices at Dalian Commodity Exchange have edged up by 1.68 percent today, coming to RMB 937/mt ($143/mt) compared to December 2, while increasing by 4.46 percent compared to November 26.

On Thursday, rebar futures at the Shanghai Futures Exchange are standing at RMB 3,866/mt ($586/mt), decreasing by RMB 18/mt ($2.7/mt) or 0.46 percent since November 26, while decreasing by 1.23 percent compared to the previous trading day.

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 6.5592