Iron ore futures advanced above $112 a tonne on Wednesday amidst of fresh waves of speculative trading seen in the market. Rebar and iron ore were supported after hearing that steel inventory is down this week. Steel inventory data by Mysteel is due to be released tomorrow. At the same time, there are signs that the market is in abundant supply of iron ore.
Chinese port stockpiles have increased in the past seven weeks. In addition, Australian vessel-tracking data shows that the nation has ramped up record shipments this year. Shipments from Brazil also improved. According to latest figures, Brazil’s iron ore exports increased by 13% -on month to 33.99 million tonnes in July. Brazilian miner Vale does not see support for high prices in the short to medium term as it ramps up output, executives said last week.
Meanwhile, according to trade sources, steel margins in Hebei Province are currently at a historically low 50 RMB. Many mid and small-sized mills in the region are believed to be even running at negative margins. A correction after a series of price increases is expected, but limited supply of the steelmaking raw material is likely to keep prices elevated, analysts said.
Looking at the rebar and IO market respective open interest, about 2 mil tonnes on rebar versus 10 mil tonnes on iron ore, suggesting that there has been a bit of speculative trading going.
The most-active September contract on the Singapore Exchange moved above $112 in London after the morning DCE session. Aug was also paid 116.0.