Iron ore futures ticked up above $114 on Monday amid growing profits for industrial companies in China, though subdued trading and thin volumes are expected this week ahead of China’s “golden week” holidays. According to data from the National Bureau of Statistics, profits at Chinese industrial enterprises rose for a fourth month, as the continued recovery of production and falling costs culminated to better mining profitability.
Meanwhile, Australia’s Department of Industry predicted the rally in prices may plateau over the coming months, “The fundamental driver of price growth remains the nexus between volatile and disrupted supply from Brazil, against robust and consistent demand from China,” It said in its quarterly report, citing that there is little immediate prospect for a major change in these dynamics.
The Department of Industry projected the price to be around $100 a tonne over the final quarter of 2020, before easing to around $80 by end-2021 and $75 by end-2022.
The benchmark October contract traded up from 113.4 to as high as 114.3. Nov was also seen trading from 110.0 to 110.85. Spreads remained largely unchanged to Friday’s levels, with Q4/Q1 at 8.65 and Q1/Q2 at 6.65. Oct/Nov traded 3.35 and 3.4 in decent chunks while Oct/Dec also traded at 6.5 and 6.6.