SHANGHAI, Jun 17 (SMM) – Lower inventories and continued demand from steel mills are likely to keep spot prices of seaborne iron ore robust this week, SMM expects.
As of June 14, iron ore stocks across 35 Chinese ports shrank 2.89 million mt from a week ago and 34.83 million mt from a year ago, standing at 112.44 million mt. SMM data showed. This marked 10 consecutive weeks of decline. Lower arrivals significantly reduced stocks across major ports.
Daily average deliveries from the 35 ports fell 23,000 mt from a week ago, but grew 250,600 mt from a year ago, and stood at 2.69 million mt last week. Major ports in the east and north saw lower deliveries as higher prices of iron ore kept steel mills cautious about purchasing.
Arrivals across major ports in the north are expected to inch up this week, and this will ease tight supplies, SMM expects.
An SMM survey showed that operating rates across blast furnaces in China are likely to extend increase by 0.27 percentage point on the month to 89.85% in June, indicating continuous demand for iron ore.
Iron ore prices surged in the week to Friday June 14 after moderation two weeks ago, as a potential shipment delay at Rio Tinto grew concerns about tight supplies. Two oil tanker blasts in the Gulf of Oman last Thursday buoyed oil prices and raised the expectations of higher sea freight charges, which also boosted iron ore prices.
The most-active September contract at the Dalian Commodity Exchange jumped to a high of 797.5 yuan/mt last week. This expanded growth in spot prices of iron ore at ports.
As of Friday June 14, PB fines in Shandong at Tangshan traded at 810-820 yuan/mt, up 50 yuan/mt or 6% on the week.
Recent market talk suggested that Rio Tinto will delay the delivery for some contracts for July and August after a cyclone affected the quality of its Pilbara lumps. This further reinforced the anticipation that iron ore supplies will tighten.
Chinese Customs data showed that China’s imports of iron ores and concentrates in January-May declined 5.2% from the same period last year, to stand at 423.92 million mt. Imports in May posted 83.75 million mt, down 11% on the year. This was against the backdrop of record-high production across domestic steel mills, as pig iron output in January-April rose 10.7% on the year.
The MMI price index for spot iron ore with 62% Fe at ports registered 824 yuan/mt last Friday, up 48 yuan/mt from a week earlier. This translated to $111.07/mt cfr, up $6.71/mt, or 6.4% on the week.
