IRON ORE DAILY: Lump prices rise amid tight supplies

Iron ore registered increases across the board on active seaborne trading on Wednesday January 6, with lump prices surging due to tight supplies, sources told Fastmarkets.

Fastmarkets iron ore indices 
62% Fe fines, cfr Qingdao: $168.72 per tonne, up $0.86 per tonne
62% Fe low-alumina fines, cfr Qingdao: $168.75 per tonne, up $0.75 per tonne
58% Fe fines high-grade premium, cfr Qingdao: $155.36 per tonne, up $0.71 per tonne
65% Fe Brazil-origin fines, cfr Qingdao: $186.10 per tonne, up $2 per tonne
62% Fe fines, fot Qingdao: 1143 yuan per wet metric tonne (implied 62% Fe China Port Price: $165.06 per dry tonne), up by 3 yuan per wmt

Key drivers
The most-traded May iron ore futures contract on the Dalian Commodity Exchange (DCE) began to slide after opening, but rebounded in the afternoon trading session to end the day down by just 0.5% from Tuesday’s closing price of 1,039 yuan ($161) per tonne.

And iron ore forward-month swaps contracts on the Singapore Exchange (SGX) followed a similar pattern, falling in the morning session but rebounding later. By 6:15pm Singapore time, the most-traded February contract had registered an increase of $1.05 per tonne compared with Tuesday’s settlement price of $163.70 per tonne.

Sources said the seaborne market was active and lump performed well due to tight supplies, but trading sentiment in fines was depressed due to the approaching cold weather in China and the resurgence of Covid-19 in Hebei province, the largest steel hub in China.

A buyer source in southern China said iron ore lump had been in favor recently due to the high price of coke and extremely tight pellet supplies, and today the lump prices gained further due to the shortage, especially of Pilbara Blend lump.

Fastmarkets’ iron ore index for 63% Fe Australia-origin lump ore premium, cfr Qingdao reached 29 US cents per dry metric tonne unit (dmtu) on Wednesday, up by 9 cents per dmtu.

A trading source in Shanghai said the new cold wave in China could affect demand for rebar because of a slowdown in construction activity. He added that the re-emergence of Covid-19 in Hebei province, which media reports suggest now faces “wartime mode” restrictions, has depressed trading sentiment and has limited any price increases despite the active seaborne market.

Quote of the day
“Supplies of seaborne high-grade Brazilian Carajas fines are also tight, so long-term contracts could also be affected. As a result, there are high bids with strong demand in the market but only a few deals recently,” a buyer source in Singapore said.

Trades/offers/bids heard in the market
Globalore, 70,000 tonnes of 62.5% Fe Pilbara Blend lump, traded at the February average of a 62% Fe index plus a lump premium of $0.2880 per dry metric tonne unit, laycan February 5-14.

Globalore, 80,000 tonnes of 62% Newman fines, traded at $167.50 per tonne cfr China, laycan February 1-10.

Beijing Iron Ore Trading Center (Corex), 80,000 tonnes of 60.5% Fe Jimblebar Blend fines, traded at the February average of two 62% Fe indices plus a discount of $1.85 per tonne, February arrival.

Corex, another 80,000 tonnes of 60.5% Fe Jimblebar Blend fines, traded at the February average of two 62% Fe indices plus a discount of $1.75 per tonne, February arrival.

Corex, 80,000 tonnes of 60.8% Fe Mining Area C fines, traded at the January average of two 62% Fe indices plus a premium of $0.20 per tonne, laycan January 6-15.

Corex, 80,000 tonnes of 60.8% Fe Mining Area C fines, traded at the January average of two 62% Fe indices plus a premium of $0.20 per tonne, laycan January 26-February 4.

Corex, joint cargo, 100,000 tonnes of 61.5% Fe Pilbara Blend fines, traded at the January average of a 62% Fe index plus a premium of $1 per tonne; and 70,000 tonnes of 62.3% Fe Pilbara Blend lump, traded at the January average of a 62% Fe index and its lump premium, laycan January 24-February 2.

Corex, joint cargo, 60,000 tonnes of 60.5% Fe Jimblebar Blend fines, traded at the January average of two 62% Fe indices plus a premium of $0.10 per tonne; and 50,000 tonnes of 62.3% Fe Newman fines, traded at the January average of two 62% Fe indices plus a premium of $1.10 per tonne, laycan January 16-25.

Globalore, 170,000 tonnes of 65% Fe Iron Ore Carajas fines, bid made at $186.40 per tonne cfr China, February arrival.

Corex, 170,000 tonnes of 61% Fe Pilbara Blend fines, offered at $165.25 per tonne cfr China, laycan January 30-February 8.

Corex, 170,000 tonnes of 62% Fe Pilbara Blend fines, offered at the February average of a 62% Fe index plus a premium of $3.35 per tonne, laycan January 30-February 8 (bid made at the February average of a 62% Fe index plus a premium of $2.60 per tonne).

Corex, 58,000 tonnes of 55% Fe Gibson lump, offered at $90 per tonne cfr China, laycan January 5-15.

Port prices
Pilbara Blend fines were traded at 1,115-1,125 yuan per wmt in Shandong province and Tangshan city on Wednesday, compared with 1,110-1,125 yuan per wmt on Tuesday.

The latest range is equivalent to about $161-162 per tonne in the seaborne market.

Dalian Commodity Exchange
The most-traded May iron ore futures contract closed at 1,033.50 yuan ($160) per tonne on Wednesday, down by 5.50 yuan per tonne from Tuesday’s close.

Alex Theo in Singapore contributed to this article.