IRON ORE DAILY: Prices rebound amid futures gains, Vale supply concerns

Physical iron ore prices improved on Tuesday March 12 following advances in China’s futures and steel markets, as well as further uncertainty over Vale’s supplies from Brazil.

MB 62% Fe Iron Ore Index: $85.25 per tonne cfr Qingdao, up $1.46 per tonne.
MB 62% Fe Pilbara Blend Fines Index: $84.37 per tonne cfr Qingdao, up $1.18 per tonne.
MB 62% Fe Iron Ore Index-Low Alumina: $87.35 per tonne cfr Qingdao, up $1.69 per tonne.
MB 58% Fe Premium Index: $76.38 per tonne cfr Qingdao, up $2.02 per tonne.
MB 65% Fe Iron Ore Index: $96.80 per tonne cfr Qingdao, up $1.40 per tonne.
MB 62% Fe China Port Price Index: 625 yuan per wet metric tonne (implied 62% Fe China Port Price $82.64 per dry tonne), up 5 yuan per wmt.

Key drivers
Brazilian miner Vale said late on Monday that it had received a notification from the Mangaratiba city government, in Rio de Janeiro state, ordering the temporary suspension of port activities at the Guaíba Island terminal.

However, the miner said it has all the required licenses for the regular operation of the terminal – issued by the competent authorities – and would be taking “all appropriate measures” to ensure the quick re-startestablishment of activities at the port.

The miner usually ships iron ore from its Southern System operations in Brazil through the Guaiba Island terminal.

In 2017, the Guaiba Island terminal loaded 43.5 million tonnes of iron ore, and shipments for 2018 are expected to amount to about 40 million tonnes, according to market participants.

A number of Vale’s term contract customers in China told Fastmarkets they had yet to receive any official word from the miner about any impact on deliveries and said that, so far, the supply chain remains normal.

China’s steel and iron ore futures have trended up since Monday night, with the benchmark rebar and hot-rolled coil contracts leading gains on Tuesday – although some market participants said the latest Vale issue was more or less boosting iron ore futures prices.

The country’s spot markets for HRC and rebar posted gains of 10-50 yuan ($1.50-7.40) per tonne on Tuesday.

In China, a visit by a deputy minister of ecology & the environment to the Tangshan steel hub led to the dismissal of a local official for poor control over air pollution, according to a Chinese mill source.

This unusual dismissal demonstrates how seriously the government is about pollution control, he added.

A number of mills in Tangshan have already started to put blast furnaces on maintenance, partly to comply with production-cut obligations for the winter heating season, and partly due to a lack of sintered ore given the ongoing restrictions on sintering operations, sources told Fastmarkets.

A ban on port movements at Tangshan has been temporarily relaxed – from 4pm local time on Tuesday unitl 8am on Friday – thanks to favourable  weather conditions, according to local media reports.

Spot iron ore trading at Chinese ports picked up during the day, and prices began to rise – especially in the afternoon.

Several seaborne deals also closed on platforms or via tenders at stronger fixed prices or at largely stable premiums or discounts.

Fastmarkets’ daily MB 62% Fe Iron Ore Index rose $1.46 per tonne on Tuesday, while the daily MB 65% Fe Iron Ore Index increased $1.40 per tonne. The price movements were based on the visible market activity detailed below, which was included in the index calculation according to the published methodology.

No data was discarded in the calculation of these indices. Any data received under Data Submitter Agreements or subject to a confidentiality request will not be published.

Quote of the day
“The market has reacted to a slight uptrend after news of Vale’s Guaiba port being temporarily [closed] last night, supporting iron ore prices,” a Singapore-based trader told Fastmarkets on Tuesday.

Trades/offers heard in the market
Rio Tinto, tender, 170,000 tonnes of 61% Fe Pilbara Blend fines, traded at $83.01 per tonne cfr China, laycan March 28-April 6.

Vale, Beijing Iron Ore Trading Center (Corex), 170,000 tonnes of 65% Fe Iron Ore Carajas, traded at $96.80 per tonne cfr China, laycan March 8-17.

BHP, Global Ore, 90,000 tonnes of 62% Fe Jimblebar fines, traded at the April average of two 62% Fe indices at a discount of $3.90 per tonne, April delivery.

BHP, Global Ore, joint cargo, 130,000 tonnes of 62% Fe Mining Area C fines, traded at the April average of two 62% Fe indices at a discount of $1.75 per tonne; 110,000 tonnes of 62.5% Fe Newman Blend lump, traded at the April average of a 62% index and its lump premium, adjusted for Fe content, plus a premium of $1.50 per tonne, laycan March 26-April 4.

BHP, tender, 90,000 tonnes of 62.4% Fe Newman Blend fines, traded at the April average of a 62% Fe index, adjusted for Fe content, plus a premium of $1.71 per tonne, April delivery.

BHP, tender, 90,000 tonnes of 62.4% Fe Newman Blend fines, traded at the April average of a 62% Fe index, adjusted for Fe content, plus a premium of $1.71 per tonne, laycan March 26-April 4.

Vale, Global Ore, 170,000 tonnes of 62% Fe Brazilian Blend fines, offered at $88.25 per tonne cfr China, laycan April 10-19 (bid made at $87.05 per tonne cfr).

Global Ore, 170,000 tonnes of 62% Fe Pilbara Blend fines, offered at $85 per tonne cfr China, laycan April 16-25.

Corex, 190,000 tonnes of 61.5% Fe Pilbara Blend fines, offered at the April average of a 62% Fe index at a premium of $2 per tonne, laycan April 22-May 1.

Port prices
Pilbara Blend fines traded at around 610-620 yuan per wmt in Tangshan city and Shandong province during the day, compared with 607-620 yuan per wmt a day earlier, sources told Fastmarkets.

The latest price range was equivalent to $80.60-82 per tonne cfr China.

Dalian Commodity Exchange afternoon close
The most-traded May iron ore futures contract closed at 612.50 yuan per tonne on Tuesday, up by 14.50 yuan per tonne from Monday’s closing price.

Deepali Sharma in Singapore contributed to this article.