Iron ore prices have stabilised near multi-year highs

Spencer Platt/Getty Images
  • Iron ore prices appear to be stabilising near multi-year highs.
  • Chinese iron ore and steel futures staged a modest reversal on Tuesday, giving up earlier gains to finish lower. That move extended in overnight trade.

Iron ore prices have stabilised near multi-year highs.

According Metal Bulletin, the spot price for benchmark 62% fines rose 1% to $89.21 a tonne on Tuesday, logging its third gain in the past four sessions.

It has now traded in a range between $87.22 and $90.58 a tonne since February 11.

Like the benchmark, the price for 58% fines also rose, adding 0.1% to settle at $69.74 a tonne.

In contrast, the price for 65% fines slipped 0.2% to $100.60 a tonne.

The mixed performance across spot markets came despite modest weakness in Chinese steel and bulk commodity futures on Tuesday.

In Shanghai, the most actively traded rebar and hot-rolled coil contracts finished at 3,655 and 3,638 yuan respectively, down from Monday’s night session close of 3,691 and 3,671 yuan.

Both contracts gave up earlier gains in the latter parts of the session.

The modest reversal in steel futures was mirrored in Dalian iron ore futures with the May 2019 contract ending trade at 631 yuan, down from the prior close of 635.50 yuan.

Coking coal and coke contracts managed to buck the broader trend, finishing slat to slightly higher compared to the close on Monday evening.

As seen int the scoreboard below, both steel and iron ore futures continued to ease in overnight trade on Tuesday.

SHFE Hot Rolled Coil ¥3,631 , -0.68%
SHFE Rebar ¥3,639 , -0.93%
DCE Iron Ore ¥624.50 , -1.19%
DCE Coking Coal ¥1,256.50 , -0.12%
DCE Coke ¥2,083.50 , 0.68%

The weakness in iron ore futures came despite renewed uncertainty over Brazilian seaborne supply.

“The Brazilian government has banned new upstream mining dams and ordered the decommissioning of all such dams by 2021,” said analyst at ANZ Bank.

“This brings another round of uncertainty on iron ore production resumption in the country as this move would affect 50 upstream mining dams in the Minas Gerais state alone.”

Nor was the any reaction to news that BHP is unable to lift iron ore production levels to make up for any potential Brazilian shortfall.

“BHP said it doesn’t ‘have any additional capacity to put into this market’ in response to the supply disruption caused by the dam collapse at Vale’s Feijao iron ore mine in January,” said Vivek Dhar, Mining and Energy Commodities Analyst at the Commonwealth Bank.

“We expect the supply response by Australian miners to be relatively tame, mostly due to port and rail infrastructure constraints.

“Any additional tonnes from Australian miners are unlikely to meaningfully change the around 70 million tonnes of seaborne supply that has been sidelined by Vale and Brazilian regulators.”

Trade in Chinese commodity futures will resume at midday AEDT.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.