Iron ore prices climb to new cyclical highs

IMDbRocky IV / Metro-Goldwyn-Mayer Studios
  • Iron ore prices climbed to fresh multi-year highs on Friday.
  • The benchmark price for 62% fines rose to $97.24 a tonne, a level not seen since July 7, 2014. Higher and lower grades also closed at or near multi-year highs.
  • Trade in Chinese commodity futures will resume at 11am AEST.

Iron ore prices climbed to fresh multi-year highs on Friday, led by higher grades.

According to Metal Bulletin, the spot price for benchmark 62% fines jumped 2% to $97.24 a tonne, the highest level since 7 July 2014.

Higher grades also rallied with 65% fines lifting 1.5% to $111.50 a tonne, settling at the loftiest level since the start of 2016 when Metal Bulletin first produced daily spot price movements for the the grade.

58% fines were the relative laggard for the session, inching up 0.1% to $83.10 a tonne.

The steep gains across higher grades followed similar moves in Chinese steel futures during Friday’s day session.

Rebar and hot-rolled coil contracts in Shanghai rose to 3,746 and 3,682 yuan respectively, up from 3,724 and 3,664 yuan on Thursday evening.

According to Reuters, citing data from Mysteel consultancy, utilisation rates at Chinese steel mills fell 1.8 percentage points to 68.78% last week, reflecting the impact of of tighter production restrictions in Tangshan, China’s top steel production hub.

Separately, steel inventory held by Chinese traders fell by 273,000 tonnes to 12.14 million tonnes over the same period, according to additional data from Mysteel.

The strength in steel futures was mirrored in bulk commodity contracts during the session.

Iron ore futures in Dalian, like physical markets, also pushed higher with the September 2019 contract finishing at 655.5 yuan, up from Thursday’s night session close of 639.5 yuan.

Coking coal and coke futures, also traded in Dalian, made it a clean sweep of gains for the session, lifting to 1,362 and 2,167 yuan respectively.

Despite modest profit-taking in all five contracts, most of the earlier moves in Chinese futures were sustained in overnight trade on Friday.

SHFE Hot Rolled Coil ¥3,670 , -0.08%
SHFE Rebar ¥3,737 , 0.03%
DCE Iron Ore ¥651.50 , 0.70%
DCE Coking Coal ¥1,359.00 , 0.22%
DCE Coke ¥2,163.50 , 0.23%

“Ongoing supply issues have seen the bulk commodity sector protected from the issues surrounding the US-China trade talks,” said analysts at ANZ Bank.

“Last week Brazilian resources company Vale reported a 30% fall in first quarter sales following the dam-related iron ore mine closures. The market was also hit with another supply disruption after the US applied sanctions in Iranian iron ore exports.”

Trade in Chinese commodity futures will resume at 11am AEST.

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