Iron ore price tracks upward momentum in front-month swap contracts

Seaborne iron ore prices bucked the downward trend on Tuesday January 18 and tracked an upward movement on the front-month swap contracts, sources told Fastmarkets.

Key drivers
Positive macroeconomic policy prompted market sentiment in iron ore futures to turn bullish, but trading at both the Chinese ports and the seaborne market remained limited because most end-users have completed restocking for the upcoming week-long Lunar New Year holiday, which starts on February 1, a trader source from Shanghai said.

Overall iron ore market sentiment for physical cargoes remained weighed down by limited demand from steelmakers, a Xiamen-based analyst said.

The same analyst added that most mills in southern China have already completed their re-stocking of iron ore inventories ahead of the upcoming holiday, but some mills in northern China remained cautious and were re-stocking on an as-needed basis.

Northern China-based steelmakers were still unsure if sintering restrictions will be stricter because of the upcoming Winter Olympic games in Beijing, or if the Chinese government will impose any form of steel production curbs, the Xiamen-based analyst added.

Lump premium in the seaborne market, however, came under pressure because of stronger coke prices, a mill source in south China said.

The same mill source added that mills’ seaborne iron ore lump cargo demand was depressed because mills were able to procure cheaper cargoes at Chinese ports.

The most-traded May iron ore futures contract on the Dalian Commodity Exchange was trending down during the morning trading session but gained toward the close of the market, ending the day up by 1.4% from its closing price of 705 yuan ($111) per tonne on Monday.

The forward-month iron ore swaps contracts on the Singapore Exchange fluctuated upwards. By 6:11pm Singapore time, the most-traded February contract was down by $2.88 per tonne compared with Monday’s settlement price of $124.12 per tonne.

Fastmarkets iron ore indices
62% Fe fines, cfr Qingdao: $127.65 per tonne, up $2.00 per tonne
62% Fe low-alumina fines, cfr Qingdao: $130.09 per tonne, up $2.01 per tonne
58% Fe fines high-grade premium, cfr Qingdao: $102.19 per tonne, up $3.11 per tonne
65% Fe Brazil-origin fines, cfr Qingdao: $158.10 per tonne, up $4.00 per tonne
63% Fe Australia-origin lump ore premium, cfr Qingdao: $0.2450 per dry metric tonne unit (dmtu), down $0.0450 per dmtu
62% Fe fines, fot Qingdao: 824 yuan per wet metric tonne (implied 62% Fe China Port Price: $119.84 per dry tonne), down by 8 yuan per wmt

Quote of the day
“There is a lot of upside for [iron ore] lump demand post-Lunar New Year. The Beijing Winter Olympics will likely prompt the Chinese government to impose strict sintering restrictions to manage the air quality in northern China. In addition, several market participants strongly believe that there will be a push with government aid to meet housing demand from March onward, so that will likely spike demand for direct-charge raw materials,” a Singapore-based trader said.

Trades/offers/bids heard in the market

Vale, Globalore, 190,000 tonnes of 65% Fe Iron Ore Carajas fines, traded at $158.10 per tonne cfr China, bill of lading dated January 12.

BHP, Globalore, 80,000 tonnes of 62.5% Fe Newman Blend lump, traded at the February average of a 62% Fe index on an fob Australia basis plus a lump premium of $0.2500 per dmtu, laycan February 11-20.

BHP, Beijing Iron Ore Trading Center, 80,000 tonnes of 56.7% Fe Yandi fines, traded at the March average of two 62% Fe indices plus a discount of $16.20 per tonne, March delivery.

Rio Tinto, Globalore, 170,000 tonnes of 62% Fe Pilbara Blend fines, offered at $127.25 per tonne cfr China, laycan February 4-13.

BHP, tender, 80,000 tonnes of 60.5% Fe Jimblebar fines, laycan February 6-15.

Market participant indications
Fastmarkets index for iron ore 62% Fe fines
Pilbara Blend fines: $123-127.30 per tonne cfr China
Brazilian Blend fines: $127.89-133 per tonne cfr China
Newman fines: $125.89-129.37 per tonne cfr China
Mac fines: $118.53-121.65 per tonne cfr China
Jimblebar fines: $100.43-107.91 per tonne cfr China

Port prices
Pilbara Blend fines were traded at 795-818 yuan per wmt in Shandong province, Tangshan city on Tuesday, compared with 805-828 yuan per wmt on Monday.

The latest range is equivalent to about $115-119 per tonne in the seaborne market.

Dalian Commodity Exchange
The most-traded May iron ore futures contract closed at 715 yuan ($113) per tonne on Tuesday, up by 10 yuan per tonne from Monday’s closing price.

Alice Li in Shanghai contributed to this article.