Iron ore markets steady following a sharp and sudden plunge

Michael Regan / Getty Images
  • Iron ore markets steadied on Thursday after falling heavily in the prior session.
  • Another Brazilian iron ore mine facility has been ordered to halt production, according to a court ruling seen by Reuters.
  • Tropical Cyclone Veronica is barreling towards Australia’s Pilbara coastline, and will likely impact Australian iron ore supply in the coming days.

Iron ore markets have steadied after falling heavily on Wednesday.

According to Metal Bulletin, the spot price for benchmark 62% fines rose 0.2% to $84.49 a tonne, halting a near-5% slide recorded in the prior to sessions.

58% fines also rose 0.2%, settling at $69.63 a tonne. Higher grades managed to buck the broader trend with the price for 65% Brazilian iron ore fines slipping 0.2% to $95.40 a tonne.

All three grades fell sharply on Wednesday as concerns about supply disruptions eased.

The mixed performance in spot markets was replicated in Chinese steel and bulk commodity futures on Wednesday.

After lifting to as high as 622 yuan at one point during the session, the most actively traded May 2019 iron ore contract reversed hard into the close, ending the day at 612 yuan. That was just below the 613 yuan it closed on Wednesday evening.

Rebar and hot-rolled coil futures also gave up earlier gains, ending trade at 3,772 and 3,692 yuan respectively, down from Wednesday’s night session close of 3,805 and 3,719 yuan.

Both coking coal and coke contracts finished the session close to where they started it, sitting at 1,233.5 and 1,971.5 yuan respectively.

There was very little movement on those levels during Thursday’s night session.

SHFE Hot Rolled Coil ¥3,712 , 0.05%
SHFE Rebar ¥3,771 , -0.68%
DCE Iron Ore ¥614.00 , 0.24%
DCE Coking Coal ¥1,238.00 , 0.57%
DCE Coke ¥1,972.50 , -0.13%

Trade in Chinese commodity futures will resume at midday AEDT.

In news that will only add to uncertainty over the outlook for Brazilion iron ore supply, Brazilian mining giant Vale has been ordered to halt production at its Dique III iron ore facility in the state of Minas Gerais, according to the court order seen by Reuters.n

Separately, local government officials in Minas Gerais have granted permission for Vale to resume iron ore operations at its Brucutu facility. Activity at the complex had been suspended since early February.

In recent weeks, speculation over the severity of Brazilian supply disruptions following a deadly mining disaster in late January has dominated movements in both spot and futures markets.

While that’s likely to continue for some time yet, attention is likely to switch temporarily to Australian supply in the coming days with a severe tropical cyclone set to hit the Pilbara coastline this weekend.

This region contains major iron ore mine and transport infrastructure, including Port Hedland, the world’s largest iron ore loading terminal.

Tropical Cyclone Veronica, currently a category 4 system, is expected to strengthen into category 5 system on Friday. Australia’s Bureau of Meteorology expects Veronica make landfall to the west Port Hedland this weekend, leading to the Pilbara Ports Authority to clear its Ashburton, Dampier and Port Hedland facilities.

BOM

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