Iron ore prices remain choppy

Mark Kolbe/Getty Images
  • Iron ore spot prices were all over the place on Tuesday. Lower grades soared, mid grades slid while higher grades did absolutely nothing.
  • Chinese crude steel output stood at 71 million tonnes in February, up 9.2% on a year earlier.
  • Operations at Port Hedland, the world’s larges iron ore loading terminal, have resumed following a temporary closure due to Tropical Cyclone Veronica.

Iron ore spot markets couldn’t figure out what direction to head on Tuesday. Lower grades soared, mid grades slid while higher grades did absolutely nothing.

According to Metal Bulletin, the price for benchmark 62% fines slipped 0.7% to $85.23 a tonne, adding to the losses seen on Monday.

In contrast, 58% fines surged 2.7% to $71.22 a tonne, leaving it at the highest level in a week.

65% Brazilian fines completed the whack price action seen during the session, holding steady at $96.40 a tonne.

Despite the wild daily movements, it’s clear from the chart below that prices have been relatively stable over recent months, continuing to cling onto the gains seen around the turn of the year.

Recent gains reflect a combination of supply disruptions in Brazil, fluctuations in steel mill profit margins and less severe industrial output restrictions in China during winter compared to prior years.

Another factor has been strong Chinese demand.

According to data released by the World Steel Association on Tuesday, Chinese crude steel stood at 71 million tonnes in February, based on estimates from the China Iron and Steel Association, up a hefty 9.2% on the same period a year earlier. Total steel production worldwide grew by 4.1% from a year earlier to 137.3 million tonnes last month.

The skittish price action in spot markets was mirrored in Chinese iron ore futures traded in Dalian with the May 2019 contract sliding to 609 yuan, down from 616 yuan on Monday evening.

The decline coincided with news that Port Hedland, the world’s largest iron ore loading terminal located on Australia’s Pilbara coastline, had resumed operations following a reduced threat from Tropical Cyclone Veronica.

According to the Pilbara Ports Authority, the port was shut for a total of 92.5 hours. The Port of Ashburton, also operated by the authority, also resumed operations having been shut for a total of 109.5 hours.

Chinese steel futures also edged lower during the session, possibly placing downward pressure on bulk commodity contracts.

Rebar and hot-rolled coil eased to 3,705 and 3,662 yuan respectively, down from Monday’s night session close of 3,710 and 3,670 yuan.

Fitting with the choppy price action seen earlier in the day, Chinese futures recouped some of those losses in overnight trade on Tuesday.

SHFE Hot Rolled Coil ¥3,659 , 0.03%
SHFE Rebar ¥3,708 , 0.22%
DCE Iron Ore ¥614.50 , 0.16%
DCE Coking Coal ¥1,235.50 , 0.53%
DCE Coke ¥1,968.00 , -0.03%

Trade in Chinese commodity futures will resume at midday AEDT.

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