Iron ore prices have increased sharply on Friday, May 29, and exceeded $100/mt CFR, last seen in early August 2019. Strong buying, the upward jump in iron ore and steel futures prices together with much better sentiments in the steel market due to possible production cuts in Tangshan have all contributed to the hike in the price of the raw material.
The price for iron ore fines with 62 percent Fe content has increased by $4/mt today to $100.8/mt CFR, while fines with 65 percent Fe content have also surged by $4/mt, rising to $116.9/mt CFR.
A deal for 170,000 mt of Brazilian blended fines has been signed at $105/mt CFR for June shipment. About 80,000 mt of Mac fines with 60.8 percent Fe have been sold at the July index with $0.4/mt extra. Also, 100,000 mt of Yandi fines have been traded at the July 62 percent fines index with a $4/mt discount. Two cargoes for Pilbara and Newman lumps, 70,000 mt each, have been sold with premiums of $0.157/mt and $0.158/mt respectively.
Stronger futures prices have been the major factor contributing to the recent hike in the spot market. Iron ore prices at Dalian Commodity Exchange have increased by 6.4 percent or RMB 45.5/mt ($6.4/mt) to RMB 752/mt ($105.5/mt) on Friday. While iron ore inventories at Chinese ports are at a three-year low and mills have been willing to restock, supply concerns have increased in the market today. Brazil reported a record in new daily Covid-19 cases - 26,417 - on Friday, according to the country’s ministry. With the total number of cases at 438,238, the country is in second place in the world after the US. Credit Suisse Group recently said that the current situation with strong demand from China and possible supply disruptions will persist until the end of June.
Moreover, today market sources have been discussing the draft plan of the Tangshan government for production cuts in June, which has supported sentiments in the steel market. According to the plan, the mills in the C category will be forced to cut capacity of sintering machines and blast furnaces by 20-50 percent. In the current market conditions, when demand for steel is firm, this development has pushed up steel futures and spot prices today. Rebar at Shanghai Future Exchange has gained RMB 87/mt ($12/mt) or 2.5 percent on Friday, rising to RMB 3,579/mt ($502/mt).