IRON ORE DAILY: Seaborne prices slump amid thin liquidity, soft sentiment

Iron ore prices fell on Thursday July 29 amid thin liquidity and soft market sentiments, sources said.

Fastmarkets iron ore indices
62% Fe fines, cfr Qingdao: $196.06 per tonne, down $6.62 per tonne
62% Fe low-alumina fines, cfr Qingdao: $197.46 per tonne, down $5.62 per tonne
58% Fe fines high-grade premium, cfr Qingdao: $160.87 per tonne, down $7.36 per tonne
65% Fe Brazil-origin fines, cfr Qingdao: $229.20 per tonne, down $5.00 per tonne
62% Fe fines, fot Qingdao: 1,351 yuan ($207.8) per wet metric tonne (implied 62% Fe China Port Price: $194.48 per dry tonne), down by 40 yuan per wmt
63% Fe Australia-origin lump ore premium, cfr Qingdao: $0.4450 per dry metric tonne unit (dmtu), down $0.0100 per dmtu.

Key drivers
Market participants believe that the thin liquidity in the seaborne iron ore market was driven by the soft market sentiment which had prompted both the seaborne prices and Chinese futures to fall.

Soft market sentiment has likely further depressed buying interest for both steelmakers and trading houses, which might have caused limited trading activity at the seaborne market and at the Chinese ports, a northern China buyer source said.

The steel production cut has also limited demand outlook for the rest of 2021, a trading source in Shanghai said.

The source added that despite the slight increase in the Chinese futures on Wednesday, bearish sentiment broke out again on Thursday.

The fall in the iron ore Chinese futures may also have been caused by a recent meeting held by the China Iron and Steel Association (CISA) emphasizing curbing 2021 steel output in China, further depressing sentiment, a trading source in Zhejiang said.

The most-traded September iron ore futures contract on the Dalian Commodity Exchange (DCE) started trending downwards just before the mid-day break, ending down by 2% from Wednesday’s closing price of 1,137.50 yuan ($175) per tonne.

The iron ore forward-month swap contract on the Singapore Exchange (SGX) also trended downward. By 6:03pm Singapore time, the most-traded September contract was down by $3.38 per tonne compared with Wednesday’s settlement price of $195.53 per tonne.

Quote of the day
“Fewer trading houses participated in a tender put up by Vale offering a cargo of Brazilian Blend fines on Thursday most likely because of the softer sentiment and lingering concerns around whether the cargo could be resold at the Chinese ports or in the seaborne market,” the trading source from Shanghai said.

Trades/offers/bids heard in the market
Beijing Iron Ore Trading Center (Corex), joint cargo, 90,000 tonnes of 60.5% Fe Jimblebar Blend fines, traded at the August average of two 62% Fe indices at a discount of 6%, plus a discount of $4.40 per tonne; and 80,000 tonnes of 60.8% Fe Mining Area C fines, traded at the August average of two 62% Fe indices at a discount of 2%, plus a discount of $4.40 per tonne, laycan August 1-10.

Globalore, 170,000 tonnes of 62% Fe Pilbara Blend fines, offered at $196.05 per tonne cfr China, laycan August 8-17.

Corex, joint cargo, 80,000 tonnes of 62.7% Fe Newman Blend lump, offered at the September average of a 62% Fe index plus a premium of $0.50 per tonne; and 90,000 tonnes of 56.7% Fe Yandi fines, offered at the September average of two 62% Fe indices plus a premium of $0.50 per tonne, laycan September 1-10.

BHP, Globalore, 80,000 tonnes of 58% Fe Yandi fines, offered at the September average of two 62% Fe indices plus a discount of $18.20 per tonne, September arrival.

BHP, Globalore, 90,000 tonnes of 62.5% Fe Newman Blend lump, offered at the September average of a 62% Fe index on an fob Australia basis plus a lump premium of $0.4550 per dry metric tonne unit (dmtu), laycan August 26-September 4 (bid made at the September average of a 62% Fe index on an fob Australia basis plus a lump premium of $0.2000 per dmtu).

Vale, tender, 170,000 tonnes of 63% Fe Brazilian Blend fines, laycan August 24-September 2.

Market participants’ indications for:
Fastmarkets index for iron ore 62% Fe fines
Pilbara Blend fines: $193.35-197.50 per tonne cfr China
Brazilian Blend fines: $193.40-200 per tonne cfr China
Newman fines: $194.72-198.50 per tonne cfr China
Mac fines: $187.54-188.28 per tonne cfr China
Jimblebar fines: $177.29-181.39 per tonne cfr China

Fastmarkets index for iron ore 65% Fe Brazil-origin fines
Iron Ore Carajas: $225-232 per tonne cfr China

Port prices
Pilbara Blend fines were traded at 1,320-1,325 yuan per wmt in Shandong province on Thursday, compared with 1,360-1,395 yuan per wmt on Wednesday.

The latest range is equivalent to about $190-191 per tonne in the seaborne market.

Dalian Commodity Exchange
The most-traded September iron ore futures contract closed at 1,114.50 yuan ($171) per tonne on Thursday, down by 23 yuan per tonne from Wednesday’s close.

Zihao Yu in Singapore and Min Li in Shanghai contributed to this article.

Decarbonization complicates an already complex marketplace. Our latest analysis, “The true price of green steel,” does a deep dive into the ripple effects that overhauling the markets will have on the steelmaking process and supply base.
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