A total of 1.06 million mt of iron ores was traded for the week ended May 14 and witnessed the iron ore prices to go above the record-high $230/mt level on good Chinese steel demand.
Apparently, restocking activities did not slow down after the post-holidays market and the high steel demand and lower inventory continued to push up iron ore prices in an overheated market.
So far, the trades volume of PBF accounted the largest market share at 68%, then followed by BRBF at 16% and finally Mac fines at 8% market share.
Record-high paper rally, good steel margins form an overhyped market
With good steel margins at estimated range of RMB 1,300-1,500/mt for blast furnace steelmakers, the Chinese mills kept up their buying interests for medium and high-grade fines.
They sought mostly for mainstream fines like PBF, while some mills showed interest for portside purchases of Newman High grade fines.
On the contrary, there was little demand for low grade fines such as Indian fines despite the tightening supplies of the product, due to the second wave of coronavirus infection in India that disrupted port operations.
The paper market played a big role for the iron ore price rally with a maximum single trading day increase of 10% during Monday in the Dalian Commodity Exchange (DCE), before the regulatory body stepped in to cool the market with trading limits.
Lesser iron ore shipments from Port Hedland in April
Another reason for the red-hot iron ore prices was linked to lesser iron ore exports from Australia’s Port Hedland in April that spurred some market speculation over supply tightness.
During April, the iron ore terminal exported 45.1 million mt of iron ore, down slightly by 0.4% on-year and down 3.4% on month, with exports to China dropping further by 6.3% on-year and 4.8% on month.
The lower shipments were linked to bad weather conditions that disrupted logistics, though most trade participants expected mining majors like Rio Tinto and BHP ramped up production and shipments later to catch up for lost ground during Q1.
