Seaborne iron ore prices have continued to increase, reaching their highest level in over four months. Mill restocking has pulled inventories lower ahead of the Chinese New Year.
The Kallanish KORE 62% Fe index gained $2.47/t on Friday and $7.50/t over the week to $136.99/dry metric tonne cfr Qingdao, the highest level since early September. The Kallanish KORE 65% Fe index increased $2.81/t from Thursday and $7.74/t on-week to $164.53/dmt cfr. The KORE 58% Fe index inched $0.31/t higher on Friday and recovered $9.55/t over the week to $109.73/dmt cfr. 40,000 tonnes of PB Lump sold at a floating price.
On the Dalian Commodity Exchange May iron ore settled up CNY 13.5/t at CNY 752.5/t ($118.67/t), while on the Singapore Exchange February 62% Fe futures settled up $3.29/t at $137.06/t. The same contract for 65% Fe and 58% Fe futures settled up $3.87/t at $164.60/t, and up $2.94/t at $103.15/t respectively. Tangshan billet held steady at CNY 4,440/t.
Across 35 ports, iron ore inventories fell 2.56 million tonnes to 150.08mt, according to SMM. A pick-up in mill restocking ahead of the Chinese New Year holiday finally brought inventory levels down decisively last week, helping drive iron ore prices higher. With only one more week of trading ahead of the holiday however this may not sustain prices for very long.
Steelmakers are however holding sales prices steady for now before seeing how the market responds to price increases after the holiday when end-user demand may recover. Their confidence in restocking has in part been supported by policies to stabilise the slowing Chinese economy. This includes a number of measures designed to ease the situation at China’s struggling developers. The success of these measures will be key in determining steel demand in the second quarter.