Iron Ore Market Update
Market Commentary
Iron ore declined on Monday as investors remained unconvinced by the recent uptick in restocking activities ahead of the peak demand season. Steel demand outlook remains a big concern to many trade participants despite the peak demand season is fast approaching due to the ongoing production curbs. 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. Blast furnace capacity utilization remained at a lowly 85.47% as of 20 August, down 0.42% from a week ago and the low utilization rate is expected to persist in the short term. There has been, however, more interest in the October cargoes as it is traditionally a peak demand season in China. Buyers are mainly interested in discounted Australian fines rather than the higher-grade alternatives.
Futures in Singapore eased off in the morning, with Oct trading down from 136.65 to 133.0. Sep also traded down from around 138.8 to as low as 135.1. Cal22 was heard trading at 114.0. Spreads were wider, with Cal22/23 around 21.30. Sep/Oct traded down to 2.5.
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