Iron ore hit two-week highs as Chinese steelmakers bought spot cargoes with few shipments on offer, encouraged by steel prices that hovered at eight-and-a-half- month peak with the hopes that high demand will strengthen after next month’s Lunar New Year break.
There have been limited cargoes offered in the spot market this week, forcing buyers seeking prompt shipments to purchase from stockpiles held at Chinese ports where prices have risen as inventories fell. Iron ore at ports has been trading at a $4 per tonne premium against fresh seaborne cargoes, said Jamie Pearce, head of broking at SSY Futures.
“There is still appetite from mills to take cargo, but I think they’re not in a restocking phase that we have seen a lot recently. They have been living hand-to-mouth with port stocks,” Pearce said. “But with the port stocks trading at such a premium and not a flood of seaborne cargoes, probably for a larger size mill, it still makes sense for them to take (spot seaborne) cargoes.” Iron ore inventories at major Chinese ports have fallen to just above 69 million tonnes (mt) currently from a high of 96 mt in early September last year, based on estimates by Australia and New Zealand Bank.
A 165,000-tonne cargo of Australian 61% grade Pilbara iron ore fines was traded at $ 151 a tonne on the trading platform run by China Beijing International Mining Exchange, traders said. That was the same price paid for the resale of a spot Pilbara fines cargo, but both were up $5 from early last week, a trader said. Benchmark iron ore with 62% iron content rose 0.7% to $ 149.40 a tonne, after four days of barely moving, based on data from the Steel Index. That was the highest since January 15.
Iron ore prices hit a 15-month peak of $ 158.50 on January 8 but have since wobbled as a Chinese restocking spree that began in December waned. For the month, the raw material is up just three percent versus a 25 % jump in December.
Improved outlook
Miners from Australia and Brazil have offered fewer spot cargoes as unfavourable weather has disrupted shipments and traders said they could also be selling more through long- term contracts with mills. Price offers for Australian and Brazilian iron ore cargoes along with other imported shipments in China rose up to $2 per tonne today, according to Chinese consultancy Umetal.
“There’s no trader willing to give any discount at the moment. They are either selling higher or waiting until after the Chinese New Year,” said an iron ore trader in Shanghai. For buyers, firmer steel prices in China are boosting confidence in purchasing iron ore at current prices. Limited cargoes offered in the spot market this week have forced buyers, seeking prompt shipments, to buy from stockpiles held at Chinese ports where prices have risen as inventories fell.
There have been limited cargoes offered in the spot market this week, forcing buyers seeking prompt shipments to purchase from stockpiles held at Chinese ports where prices have risen as inventories fell. Iron ore at ports has been trading at a $4 per tonne premium against fresh seaborne cargoes, said Jamie Pearce, head of broking at SSY Futures.
“There is still appetite from mills to take cargo, but I think they’re not in a restocking phase that we have seen a lot recently. They have been living hand-to-mouth with port stocks,” Pearce said. “But with the port stocks trading at such a premium and not a flood of seaborne cargoes, probably for a larger size mill, it still makes sense for them to take (spot seaborne) cargoes.” Iron ore inventories at major Chinese ports have fallen to just above 69 million tonnes (mt) currently from a high of 96 mt in early September last year, based on estimates by Australia and New Zealand Bank.
A 165,000-tonne cargo of Australian 61% grade Pilbara iron ore fines was traded at $ 151 a tonne on the trading platform run by China Beijing International Mining Exchange, traders said. That was the same price paid for the resale of a spot Pilbara fines cargo, but both were up $5 from early last week, a trader said. Benchmark iron ore with 62% iron content rose 0.7% to $ 149.40 a tonne, after four days of barely moving, based on data from the Steel Index. That was the highest since January 15.
Iron ore prices hit a 15-month peak of $ 158.50 on January 8 but have since wobbled as a Chinese restocking spree that began in December waned. For the month, the raw material is up just three percent versus a 25 % jump in December.
Improved outlook
Miners from Australia and Brazil have offered fewer spot cargoes as unfavourable weather has disrupted shipments and traders said they could also be selling more through long- term contracts with mills. Price offers for Australian and Brazilian iron ore cargoes along with other imported shipments in China rose up to $2 per tonne today, according to Chinese consultancy Umetal.
“There’s no trader willing to give any discount at the moment. They are either selling higher or waiting until after the Chinese New Year,” said an iron ore trader in Shanghai. For buyers, firmer steel prices in China are boosting confidence in purchasing iron ore at current prices. Limited cargoes offered in the spot market this week have forced buyers, seeking prompt shipments, to buy from stockpiles held at Chinese ports where prices have risen as inventories fell.
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