Iron Ore Market Update
Market Commentary
Iron ore futures sank over 10% to below $190 on Friday as China steps up its efforts to tame surging commodities prices. Iron ore has had a rollercoaster ride this week, surging to historical high of above $233 on Wednesday but concerns over regulatory intervention saw the steelmaking ingredient came crashing down since Thursday. On Friday, the Tangshan Market Regulation Bureau and the National Development and Reform Commission have sent delegates to talk to steel mills over the current elevated prices. These enterprises are reminded that any form of fabricating or spreading price-hike information, price manipulation, or front-loading to support prices will be punished in accordance to the law which may result in their businesses being suspended or licenses revoked. This came after Premier Li Keqiang vowed to control the surging commodities prices on Thursday. On top of that, inflation concerns are intensifying around the world amid a broad economic recovery and vast stimulus programmes.
Fundamentally, Chinese steel demand remains very robust and Chinese steelmakers have been ramping up production despite government attempts to rein in output to control the industry’s carbon emission. Rebar inventories continued to be drawn at a healthy rate while mills’ daily iron ore consumption was up 10,800 tonnes this week to 115.96 million tonnes. Meanwhile, iron ore port inventories were down an astonishing 4.25 million tonnes this week to 125.32 million tonnes, the latest Mysteel survey of 45 major ports across China revealed. This is largely attributed to previous maintenances in Australia and Brazil which resulted in lower ore deliveries from the two producers.
Futures in Singapore took a heavy beating during London morning. Jun was seen trading 194.5 pre-open and was under pressure early on, trading down to as low as 187.1 before rebounding to above 200.0. Spreads across the board crumbled as the market tanked. Cal22/23 went down at least $1 to 28.65. Jun/Jul traded at 4.55 and then at 5.1 while May/Jun traded as high as 12.5 and as low as 9.6. it was chaotic.
Physical Trades
Platform
GO traded 170,000 mt PBF at Platts Jun62% Index + $8.35/mt, for Jun 8-17 loading.
GO traded 80,000 mt Newman lump at Platts Jun index premium at 0.5200/dmt for Jun 1-10 loading.
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