- Iron ore spot prices rose across the board on Friday.
- Prices continue to be influenced by speculation over the severity of potential supply disruptions in Brazil and Australia, the world’s largest seaborne iron ore exporters.
- Chinese steel and bulk commodity futures eased a touch on Friday evening.
Iron ore prices rose for a second consecutive session on Friday, rebounding after falling sharply earlier in the week.
According to Metal Bulletin, the spot price for benchmark 62% fines jumped 1.7% to $85.96 a tonne, adding to the 0.2% gain achieved on Thursday.
58% fines rose by a smaller 0.6%, settling at $70.07 a tonne, while 65% Brazilian fines rose 0.9% to $96.30 a tonne, snapping a three session losing streak in the process.
Spot markets have been particularly volatile in recent weeks, in part reflecting uncertainty over the outlook for seaborne supply from Brazil following a deadly mining disaster in late January, along with concern that inclement weather may impact supply chains in Western Australia.
“Iron ore prices surged on Friday as Tropical Cyclone Veronica was expected to disrupt supply from Western Australia,” said Vivek Dhar, Mining and Energy Commodities Analyst at the Commonwealth Bank.
“Veronica still remains active near Port Hedland, the world’s largest iron ore export terminal, but has been downgraded to a category 2 cyclone. The Bureau of Meteorology expects Tropical Cyclone Veronica to make landfall as a category 1 cyclone just near Port Dampier — another key iron ore export terminal.
“Port Dampier, Cape Lambert and Port Hedland have all been temporarily closed.”
Dhar said that while the extent of disruption to port operation remains unknown, a five-day shutdown could see seaborne supply fall by around 10 million tonnes, or around 0.6% of total seaborne supply.
The strength in spot markets came despite a mixed performance from Chinese steel and bulk commodity futures on Friday.
According to the Dalian Commodities Exchange, the most actively traded May 2019 iron ore contract rose to 615.5 yuan, up from Thursday’s night session close of 615 yuan.
Coking coal and coke contracts also pushed higher, ending the day session at 1,248.5 and 1,999 yuan respectively, higher that the 1,238 and 1,972.5 yuan level they finished on Thursday evening.
The move in the bulks came despite flat to lower outcomes for Chinese steel futures traded in Shanghai.
Rebar finished the session at 3,768 yuan, down from 3,771 yuan on Thursday evening, while hot-rolled coil futures were unchanged at 3,712 yuan.
Despite the mixed price performance during the day session, all five contracts weakened on Friday evening.
SHFE Hot Rolled Coil ¥3,685 , -0.38%
SHFE Rebar ¥3,747 , -0.37%
DCE Iron Ore ¥615.00 , 0.41%
DCE Coking Coal ¥1,241.50 , 0.04%
DCE Coke ¥1,987.00 , 0.43%
Despite the broad based weakness, the limited movements provides few clues as to how physical markets may fare on Monday.
Trade in Chinese futures will resume at midday AEDT.
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