IRON ORE DAILY: SGX 65% Fe contract sets new monthly traded record

The Singapore Exchange’s (SGX) 65% Fe iron ore derivatives contract – which is settled against Fastmarkets’ daily index for iron ore 65% Fe Brazil-origin fines, cfr Qingdao – set a new record for traded volumes at 5.9 million tonnes so far in January, according to SGX published data on Thursday January 21.

Fastmarkets iron ore indices
62% Fe fines, cfr Qingdao: $171.51 per tonne, up $0.96 per tonne
62% Fe low-alumina fines, cfr Qingdao: $172.26 per tonne, up $0.76 per tonne
58% Fe fines high-grade premium, cfr Qingdao: $158.24 per tonne, up $0.42 per tonne
65% Fe Brazil-origin fines, cfr Qingdao: $194.70 per tonne, up $0.60 per tonne
63% Fe Australia-origin lump ore premium, cfr Qingdao: $0.3700 per dry metric tonne unit (dmtu), up $0.0050 per dmtu.
62% Fe fines, fot Qingdao: 1,168 yuan per wet metric tonne (implied 62% Fe China Port Price: $168.46 per dry tonne), up by 4 yuan per wmt

Key drivers
The 5.9 million tonnes of 65% Fe contracts trades in January overtook the previous record of 5.4 million tonnes traded in August 2020.

Iron ore forward-month 62% Fe swaps contracts on the SGX were up at 6:08pm Singapore time, with the most-traded February contract increasing by $1.53 per tonne from Wednesday’s settlement price of $165.97 per tonne.

The most-traded iron ore futures May contract on the Dalian Commodity Exchange (DCE) started off weak at the opening session on Thursday but rebounded just before the midday break, ending the session up by 0.2% from Wednesday’s closing price of 1,059 yuan ($164) per tonne.

Meanwhile, seaborne prices trended upward slightly, possibly reacting to potential supply concerns prompted by an earlier tropical low alert about a weather front making its way inland into western Australia, according to some traders.

Meteorologists anticipate heavy rains to hit the eastern Pilbara region and part of the port of Port Hedland, which might cause logistics issues. But most market participants who spoke with Fastmarkets would prefer to wait and see how the weather situation develops.

Market sentiment was overall still weak because of the limited demand seen from the steel products segment, which has a knock-on effect on iron ore demand, and some traders believe seaborne prices will see limited fluctuation.

Quote of the day
“The iron ore swaps market has been relatively weak with more selling interest in recent days. Some participants are still a little uncertain about the market but sentiment in general currently seems weak so most are looking ahead to post-Lunar New Year,” an analyst in Singapore said.

Trades/offers/bids heard in the market
Beijing Iron Ore Trading Center (Corex), 170,000 tonnes of 61% Fe Pilbara Blend fines, offered at $167.45 per tonne cfr China, laycan February 25-March 6.

Corex, 170,000 tonnes of 62% Fe Pilbara Blend fines, offered at the March average of a 62% Fe index plus a premium of $5.40 per tonne, laycan February 25-March 6 (bid made at the March average of a 62% Fe index, plus a premium of $3.20 per tonne).

Globalore, 70,000 tonnes of 62.5% Fe Pilbara Blend lump, bid made at the February average of a 62% Fe index plus a lump premium of $0.3750 per dmtu, laycan January 26-February 4.

Port prices
Pilbara Blend fines were traded at 1,135-1,155 yuan per wmt in Shangdong province and Tangshan city on Thursday, compared with 1,133-1,145 yuan per wmt on Wednesday.

The latest range is equivalent to about $164-167 per tonne in the seaborne market.

Dalian Commodity Exchange
The most-traded May iron ore futures contract closed at 1,061 yuan ($164) per tonne on Thursday, up by 2 yuan per tonne from Wednesday’s close.

Zihao Yu in Singapore contributed to this article.

Explore the six macroeconomic and steel-specific dynamics set to rebalance the Asia steel and scrap market in 2021 in our Asia Steel and Scrap: Six Key Forces in 2021 report.

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