Market Commentary
Iron ore futures advanced on Wednesday amid supply tightness across Chinese ports while optimism over global demand as well as speculation over relaxing production restrictions in Tangshan also supported price for the steelmaking ingredient. According to data by Mysteel, iron ore deliveries from Australia and Brazil were down 1.95 million tonnes this week from a week ago to 24.18 million tonnes. Deliveries to China from both Australia and Brazil were down 708,000 and 1.74 million tonnes, respectively, from a week ago. Meanwhile, the heightened political tensions between Australia and China, iron ore sales to China increased 20% in May, driving Australia’s trade surplus to a record of AU$13.3 billion, preliminary data released Wednesday by the Australian Bureau of Statistics showed. While there is doubt on whether China can keep up with its demand in June due to seasonal weakness as well as China’s crackdown on commodity prices, global demand is showing signs of picking up. Global crude steel output was up 16.5% from a year ago to 174.4 million metric tonnes in May, with China contributing 99.5 million metric tonnes, up 6.6% from a year ago.
“Overseas economies have rebounded significantly, and iron ore consumption is still relatively robust,” Huatai Futures said in a note. At the same time, market is also somewhat buoyed by talks of curtailing some of the output restrictions that are currently in place in the steelmaking hub of Tangshan by July. While there is no official words from authorities in China as of yet, some trade participants believed that the relaxation will lead to a pickup in steel demand in July.
Futures in Singapore advanced on Wednesday, with Jul trading up to 209.1 before inching up a touch to 209.5. Aug also traded up from 199.5 to 201.5. Spreads were wider in London, with Q3/Q4 trading several times at 19.6 and then at 19.7. Jul/Aug and Jul/Oct also traded at 7.85 and 21.2, respectively. Cal22/23 was marked at around 39.00 while Q3/Q4 edged up to 19.75.
Physical Trades
Platform
GO traded 170,000 mt PBF at Platts Aug index + $11.20/mt for Jul 26 – Aug 4 loading.
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