Market Commentary
Iron ore futures advanced again on Tuesday, aided by bullish sentiment in China’s equity markets as well as concerns over near-term supply tightness. Following its best single-day percentage gain in about five years on Monday, the Shanghai composite were again higher on Tuesday, despite state media calling for retail investors to be rational, contradicting earlier commentaries pushing for a stronger market. Mining majors shipped a total of 23.31 million mt during the period 28 June to 4 July, according to Platts cFlow data. cFlow stated that the decline was largely due to the seasonally slowdown in construction activities in China. Supply tightness is likely to remain in the near term. Shipments from Australia may suffer as Australian ports typically undergo scheduled maintenance checks in July while some trade sources are also expecting some supply tightness for the Brazilian ores despite the expectation that Vale will boost up its production capacity for the remainder of the year in order to meet its production guidance. The high-grade ores are believed to have lost some of its appeal among end users as mills in China are looking for cheaper and more cost-effective alternatives.
Onshore iron ore has seen an influx of money flow recently and rebounded after a period of consolidation. Technically, however, there has yet enough evidence to confirm the return of a bullish market. Futures in Singapore were also firmer on Tuesday. However, both contracts in Dalian and Singapore faded from the day’s high. Aug and Sep were seen trading at 100.0 and 96.95, respectively, just before the early morning London DCE session but since drifted lower as the morning went. Aug was seen trading down to as low as 99.35, with Sep around 96.25 just before noon. Spreads-wise, they were widened a fair bit, with Q3/Q4 at 8.1 and Cal21/22 at 8.5. Jul/Aug traded 2.7 and 2.9, Aug Sep at 3.1, Sep/Oct at 2.75 and Aug/Oct at 5.8.
Physical Trades
Platform
Beijing Iron Ore Trading Center (Corex), joint cargo, 90,000 tonnes of 60.5% Fe Jimblebar fines, traded at the September average of two 62% Fe indices at a discount of 4.5%, plus a premium of $0.20 per tonne; and 80,000 tonnes of 62.3% Fe Newman fines, traded at the September average of two 62% Fe indices plus a premium of $1.80 per tonne, laycan September 11-20.
Corex, 80,000 tonnes of 57% Fe Yandi fines, traded at the August average of two 62% Fe indices at a discount of $2.50 per tonne, August arrival.
Corex, 90,000 tonnes of 62.3% Fe Newman fines, traded at $103 per tonne cfr China, laycan July 26-August 4.
BHP, Globalore, 110,000 tonnes of 62% Fe Jimblebar fines, traded at the August average of two 62% Fe indices, plus a discount of $3 per tonne, August delivery.
BHP, Globalore, 90,000 tonnes of 62% Fe Jimblebar fines, traded at the August average of two 62% Fe indices, plus a discount of $3 per tonne, August delivery.
Rio Tinto, Globalore, 170,000 tonnes of 62% Fe Pilbara Blend fines, traded at $102.50 per tonne cfr China, laycan August 1-10.
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