Market Commentary
Iron ore futures surged to as high as $128 in Asia on Thursday as traders locked in purchases ahead of the “golden week” holiday. Some traders were thought to be making last-ditched efforts to replenish their stocks, driving up prices in the process. “Iron ore is showing quite a clear rebound because mills restock ahead of the holidays and port inventories have yet to replenish material,” said Huatai Futures Co. analyst Wang Haitao. Iron ore then came off quite sharply as investors remain unconvinced over the post-holiday demand outlook. On top of that, the ongoing power crisis and production curbs in China continues to weigh on demand for raw materials. Analysts at Goldman Sachs Group Inc. said that the market has now moved into a surplus and has subsequently cut its forecast price from $190 per tonne to $90 per tonne. Meanwhile a fatal mining accident occurred in Fortescue’s Solomon hub in Western Australia resulted in the temporary suspension of the mine complex, which has the production capacity of 75 million metric tonnes per year.
Futures in Singapore slumped to $117 in London morning. Oct was seen trading down from 119.5 to 117.5. Spreads were also narrower, with Oct/Nov traded down from 0.85 to 0.75 before widening back to 0.95. Nov/Jan traded down from 1.85 to 1.8 while Dec/Feb traded at 1.8.
Physical Trades
Platform
Vale, Beijing Iron Ore Trading Center (Corex), 170,000 tonnes of 62% Fe Brazilian Blend fines, traded at the November average of Fastmarkets’ index for iron ore 62% Fe low-alumina fines, cfr Qingdao plus a premium of $2.10 per tonne, laycan November 2-11.
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