Thin buying, volatile markets keep iron ore prices moves rangebound

Movements in seaborne iron ore prices were largely rangebound on Wednesday July 27 amid thin buying interest and market volatility, sources told Fastmarkets

Key drivers

Despite firm buying activity in the seaborne market the previous day, buying sentiment among most importers was still tepid in the absence of firm demand for downstream steel products, a Shandong-based trader told Fastmarkets.

“Iron ore traders actually expect there to be further softness in demand for raw materials, if more state-linked mills begin to impose production cuts in August,” the same trader added.

A Hong Kong-based trader believed that some buying interest might surface in the market because of the rise in prices in the Chinese domestic market, especially at a time when most mills’ inventories of raw materials were running low.

“Mills, however, are not expected to be making large cargo procurements now, when prices remain volatile, and most mills will likely continue to keep their running costs to a minimum,” the trader added.

Price volatility will probably persist in the short term, and will prompt market participants to take a cautious approach, especially with physical demand for downstream steel remaining poor, a Singapore-based trader said.

“There were a few trades on the trading platforms on Wednesday, but most buyers were heard to be trading houses. I do not think mills will be actively buying, for the time being,” a Shanghai-based analyst said.

The value of the most-traded September iron ore futures contract on the Dalian Commodity Exchange was on a downward trend on Wednesday but a slight rebound occurred just before the close of the trading session, so it ended the day down by only 0.5% from Tuesday’s settlement price of 748.50 yuan ($111) per tonne.

The forward-month swaps contracts on the Singapore Exchange traded largely sideways. By 5:45pm Singapore time, the most-traded September contract had inched up by $0.43 per tonne from the previous day’s settlement price of $112.12 per tonne.

Fastmarkets iron ore indices

62% Fe fines, cfr Qingdao: $112.04 per tonne, unchanged
62% Fe low-alumina fines, cfr Qingdao: $113.30 per tonne, down by $0.49 per tonne
58% Fe fines high-grade premium, cfr Qingdao: $100.09 per tonne, up by $0.38 per tonne
65% Fe Brazil-origin fines, cfr Qingdao: $122.60 per tonne, down by $0.10 per tonne
62% Fe fines, fot Qingdao: 776 yuan per wet metric tonne (implied 62% Fe China Port Price: $105.75 per dry tonne), up by 2 yuan per wmt

Trades/offers/bids heard in the market

BHP, Beijing Iron Ore Trading Center (Corex), 80,000 tonnes of 60.8% Fe Mining Area C fines, traded at $106.70 per tonne cfr China, laycan September 1-10.

Rio Tinto, Corex, 170,000 tonnes of 61% Fe Pilbara Blend fines, traded at $110.80 per tonne cfr China, laycan August 28-September 6.

Vale, Globalore, 85,000 tonnes of 62% Fe Brazilian Blend fines, traded at $113.30 per tonne cfr China, laycan August 18-27.

BHP, Globalore, 90,000 tonnes of 62% Fe Jimblebar fines, traded at the September average of two 62% Fe indices plus a discount of $9.75 per tonne, September delivery.

Vale, tender, 75,000 tonnes of 54.67% Fe Sinter Fines Guaiba, traded at $78.40 per tonne cfr China (62% Fe basis), bill of lading dated July 16.

Vale, tender, 65,000 tonnes of 54.97% Fe Lump Ore Non-screened Guaiba, traded on Tuesday at $80.60 per tonne cfr China (62% Fe basis), bill of lading dated July 12.

Market participants’ indications

Fastmarkets’ index for iron ore 62% Fe fines
Newman fines: $109.83-110.47 per tonne cfr Qingdao
Fastmarkets’ index for iron ore 65% Fe Brazil-origin fines
Iron Ore Carajas: $122-124 per tonne cfr Qingdao

Port prices

Pilbara Blend fines were traded at 735-750 yuan per wmt in Shandong province and Tangshan city on Wednesday, compared with 728-752 yuan per wmt on Tuesday.

The latest range was equivalent to about $100-102 per tonne in the seaborne market.

Dalian Commodity Exchange

The most-traded September iron ore futures contract closed at 744.50 yuan ($110) per tonne on Wednesday, down by 4 yuan per tonne from the previous day’s closing price.

Norman Fong and Paul Lim in Singapore contributed to this article.

What to read next
China’s National Development and Reform Commission (NDRC) will work with relevant parties to regulate crude steel production, with a focus on energy saving and reducing carbon emissions. It will also release guidance on crude steel output for different steel mills later this year after a national investigation on steel capacity
China's stainless steel prices saw a notable increase last week, driven by global sanctions affecting nickel, which is a key component
Increased construction spending could be unlocked early next year once the fraught US presidential election is settled, and steel participants are gearing up for a busy 2025
Fastmarkets will amend the frequency of its price assessments for MB-STE-0879 Steel scrap H2 Japan origin import, cfr South Korea and MB-STE-0880 Steel scrap HMS 1&2 (80:20) deep-sea origin import, cfr South Korea on Friday April 12.
Fastmarkets invited feedback from the industry on the pricing methodology for its coking coal indices and coke assessment, via an open consultation process between February 20 and March 31. This consultation was done as part of our published annual methodology review process.
As the Intercontinental Exchange launches the first RBD soybean oil futures contract, David Becker explains the advantages of having an exchange-traded derivative and how this will help protect against price volatility