Iron ore driven high despite lockdowns

Seaborne iron ore prices topped $160/tonne on Friday after surging through much of last week. Despite Covid lockdowns in many areas, easing restrictions in Tangshan and hopes of a demand recovery were driving prices higher.

The Kallanish KORE 62% Fe index jumped $3.19/tonne to $160.10/dry metric tonne cfr Qingdao, the highest level since August 2021. The Kallanish KORE 65% Fe index gained $0.81/t to $183.64/dmt cfr, and the KORE 58% Fe index leapt $6.19/t higher to $141.01/dmt cfr. 170,000t of PB fines sold at $157.70/t with a laycan in 27 April-6 May.

On the Dalian Commodity Exchange, September iron ore settled up CNY 12/t at CNY 907/t ($142.64/t), while on the Singapore Exchange May 62% Fe futures settled up $1.70/t at $161.34/t. The same contract for 65% Fe and 58% Fe futures settled up $1.55/t at $184.14/t, and up $6.71/t at $140.70/t respectively. Tangshan billet prices increased CNY 30/t to CNY 4,860/t.

An easing of restrictions on moving materials from ports in some areas has begun to bring port stocks lower. Across 35 ports, iron ore stocks fell 1.08 million tonnes to 149.35mt, according to SMM. The slight easing in restrictions on transport within Tangshan and the resumption of mill restocking in several regions led to the decline in stocks.

Meanwhile, the growing economic impact of lockdowns on key cities such as Shanghai has fuelled speculation of further stimulus measures. Government officials have sounded supportive of this, with premier Li Keqiang and the State Council encouraging the early issuance of local government special purpose bonds this year.

In the short term, however, lockdowns are expected to continue to hamper steel demand. Shanghai is due to emerge from a broad lockdown next week, but residents widely expect most of the city to remain shuttered for many more days after that.

Tomas Gutierrez UK