Market Commentary
Iron ore declined for a fifth day to $120 as production curbs in China continue to weigh on demand. Power rationing is limiting mill operations and China has brought forward its target for steels cuts. According to Bloomberg Intelligence, production between August and December is estimated to fall by 10% from a year earlier to meet the government’s pledge to lower output this year. Some trade participants are expecting further steel output cuts in the near term. Meanwhile, seasonal restocking activities ahead of China’s “golden week” holiday appear to have lacked steam while supplies remain ample. Trade participants are also expecting more stable iron ore shipments in Q4 as miners ramped up their productions to meet their respective production guidance. Furthermore, demand has suffered a further blow by the super Typhoon Chanthu which is sweeping across the coastal area in China. According to a recent survey by Mysteel, ports around the coastal areas and major cities such as Jiangsu and Zhejiang have suspended operations as of 11 September following a notice by China Maritime Safety Administration. The suspension is expected to last until 16 September. The average daily discharging volumes are expected to decrease by 440,000 tonnes while 490,000 tonnes of the average unloading volumes are expected to be affected.
Iron ore futures sank to $120 on Tuesday morning. Oct was seen trading down from 122.3 to 120.2. Spreads were flattened out, with Q1/Q2, Q2/Q3, Q3/Q4 and Q4/Q1 all around 4.20 to 4.15. 22/23 was marked at 16.4. Sep/Oct traded at 5.75, Oct/Dec at 3.00 and Nov/Dec at 1.45.
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https://fisapp.com/wp-content/uploads/2021/09/Iron-Ore-Report-14092021-Eng-Chn.pdf
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