Iron Ore Market Update
Market Commentary
Iron ore futures plunged below $150 as investors once again turned their focus to China’s wavering demand after the BHP Group warned against the risks of further steel output cuts. In its commodities outlook report, the Australian miner warned that the “increasing likelihood of stern cuts to steel output in China in the current half year” is “testing the bullish resolves of the futures markets”. The warning came as China have recently retched up efforts to cut outputs and emissions. Steel outputs have fallen by 8.4% on-year in July to 86.8 million tonnes. Total production over the first seven months remained 8% higher than last year, official data showed, suggesting that further and steeper cuts are still to come if China make do on the pledge to reduce output to below 2020’s levels. Steel production among major steelmakers in China fell by 5.61% year-on-year in July to 70.06 million tonnes while daily crude steel production fell by 8.26% year-on-year to 2.26 million tonnes, data by China’s Steel and Iron Association showed. Furthermore, total iron ore arrivals into Mainland China during July 2021 declined from all the major countries with arrivals from Australia at 56.6mt (down 21% year-on-year), Brazil (including Malaysia) at 20.3mt (down 3%), South Africa at 2.5mt (down 24%), India at 3.2mt (down 37%), Peru at 1.7mt (versus no shipment a year ago) and Chile at 1.3mt (up 1%), data by IHS Markit showed, indicating that demand for the steelmaking ingredients have wavered as China’s efforts are taking effect.
According to trade sources, steelmakers in China are in no hurry to produce, while restocking of steelmaking materials are done on a minimal, or on-demand basis due to the uncertainty around steel demand. There was also some speculation on the introduction of a steel export tax of around 10-20%, which has dampened market sentiment further. There was, however, no official announcement on the issue as yet.
Futures in Singapore took a nosedive on Tuesday in Asia and continued through to London. Sep was seen trading down from 153.5 to 148.5, the lowest since mid-April, during London morning. Q4 traded down from 148.6 to 146.25 before accelerating its slump to as low as 143.15. Spreads were crushed once again as Cal22/23 fell to around 27.40. Sep/Oct traded at 2.8 but had since narrowed to around 2.6. Sep/Q4 sold down from 5.7 to 5.60 but was more like 5.35 at the time of writing. Sep/Q1 traded at 14.4 and Q4/Q1 at 8.6 while Q4/2H-22 traded at 28.25 before spreads were smashed.
Physical Trades
Platform
Beijing Iron Ore Trading Center (Corex), 110,000 tonnes of 62.3% Fe Newman fines, traded at $154.50 per tonne cfr China, laycan September 8-17.
BHP, Globalore, 80,000 tonnes of 58% Fe Yandi fines, traded at the October average of two 62% Fe indices plus a discount of $18.50 per tonne, laycan October 6-15.
BHP, Globalore, 90,000 tonnes of 62% Fe Jimblebar fines, traded at the October average of two 62% Fe indices plus a discount of $12.50 per tonne, October arrival.
Corex, 170,000 tonnes of 62% Fe Pilbara Blend fines, traded late on Tuesday at the September average of a 62% Fe index plus a premium of $0.90 per tonne, laycan August 28-September 8.
Click below link to open today’s Singapore Iron Ore Report
Singapore Iron Ore Report 18.08.21
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