SHANGHAI, May 16 (SMM) – Iron ore prices across the Chinese markets rose on Thursday, bolstered by robust demand, as decent profit margins drove steelmakers to swing into high gear.
The most active September iron ore contract on the Dalian Commodity Exchange rose more than 5% at one point and ended the trading day 4.8% higher at 680.5 yuan/mt.
Prices in the physical market also climbed. Port spot Pilbara fines were heard to be traded at 695 yuan/mt in Shandong and Tangshan, up 15-20 yuan/mt from the previous day.
The National Bureau of Statistics (NBS) said on Wednesday that production of molten iron in April expanded 5.6% from March to 69.83 million mt, up 10.6% from April 2018, pointing to continued brisk demand for iron ore.
SMM calculation showed that mills can see a margin of 500-600 yuan/mt, with iron ore of $95/mt.
Tightening supply also buoyed prices of iron ore. Iron ore stocks across 35 major Chinese ports, tracked by SMM, have fallen for five consecutive weeks, and currently stand over 20 million mt lower than the same period last year. SMM data also showed that seaborne arrivals at Chinese ports and shipments leaving Australian and Brazil shrank in early May.