Iron Ore Market Update
Market Commentary
The rout on iron ore accelerated on Thursday as it plunged below $130 following concerns over Chinese steel demand. Iron ore has taken a heaving beating in the past fortnight as authorities in Beijing tightened controls over steel production in an attempt to reduce emission. These production controls are now widely expected to extend through to at least the end of the year. The Commonwealth Bank of Australia estimated that China’s crude steel output will decline further, at around 12.2% from August to December 2021 in order to reduce production to 2020 levels. Total production over the first seven months of the year was 8% higher than last year, official data published earlier this week revealed. Furthermore, authorities in China have moved to rein in the property market, with Suzhou and Jinan among a slew of Chinese cities now delaying land sales as Chinese regulators is considering measures to stabilize land prices. China’s home prices grow at the slowest pace in six months. “Steel prices globally have started to cool as we expected, and we hold on to our view that there will be further easing of prices for the remainder of 2021 and into 2022 as Chinese demand from the construction industry weakens,” Fitch Solutions wrote in a note. Meanwhile, the supply tightness that helped elevated iron ore prices to a record high, has eased recently. According to estimates by investment bank the UBS Group, iron ore supplies from Brazil increased by 26% from a week ago. In addition, the investment bank also noted that Brazilian shipments were up by 7% year-on-year in the past three months as Vale increased its output. It is estimated that the Brazilian miner will increase output to 343,000 metric tonnes per year by the end of 2021, up from current level of account 325,000 metric tonnes per year. Iron ore stockpiles are thought to be at a high level due to stuttering steel demand.
MySteel Rebar Inventory:
Rebar production 3.25 million tonnes, up 1.12% w-o-w.
Mills inventory 3.41 million tonnes, up 0.04% w-o-w.
Circulation inventory 7.94 million tonnes, down 1.59% w-o-w.
Futures in Singapore endured another day of bloodbath which saw the benchmark Sep contract traded down as low as $128.50 in London. Sep was seen hovering at around 139.0 during the early morning and ticked up a touch early in the session. Cal22 traded up from 117.0 to 117.5. It then came crashing down as Sep traded down to 137.0 and eventually at 134.5 at the close. The rout did not stop there as it continued to find new lows, trading down to 131.25 and then at 130.0, 129.0 and eventually 128.5, all in quick succession. Meanwhile, Cal22 traded down to 110.0. Q4 was down from around 136.0 to trade as low as 125.0. Spreads were obliterated yet again, with C22/23 around 19.65. Sep/Oct was sol down from 2.4 to 2.1 while Oct/Nov and Dec/Mar traded at 2.35 and 7.0, respectively.
Physical Trades
Platform
Beijing Iron Ore Trading Center (Corex), 170,000 tonnes of 65% Fe Iron Ore Carajas fines, traded at the October average of Fastmarkets’ index for iron ore 65% Fe Brazil-origin fines, cfr Qingdao, plus a premium of $3.20 per tonne, bill of lading dated August 17.
Click below link to open today’s Singapore Iron Ore Report
For more information please contact
FIS Iron Ore Desk
ferrous@freightinvestor.com
London Number +44 (0) 207 090 1120
Singapore: +65 6535 5189
Shanghai: +86 21 6335 4002