Seaborne iron ore prices jumped on Tuesday, supported by smaller increases for other ferrous sector products. China’s return to economic support amid a slowdown has reassured ferrous markets.
The Kallanish KORE 62% Fe index gained $5.23/t to $106.70/dry metric tonne cfr Qingdao, the highest since October. The Kallanish KORE 65% Fe index increased $5.50/t to $123.49/dmt cfr, and the KORE 58% Fe index appreciated $2.39/t to $77.06/dmt cfr.
On the Dalian Commodity Exchange, May iron ore settled CNY 31/t higher at CNY 649/t ($101.72/t), while on the Singapore Exchange January 62% Fe futures settled up $8.45/t at $112.55/t. The same contract for 65% Fe and 58% Fe futures settled up $9.02/t at $130.43/t, and down $0.08/t at $78.25/t respectively.
Both scrap and billet prices also continue to push higher. 6mm+ heavy scrap delivered to mills in the Yangtze River Delta gained another CNY 8/t to 3,386/t. In Tangshan, billet prices gained another CNY 20/t to CNY 4,360/t.
Ferrous markets have been buoyed by the cut in the banking reserve requirement ration announced on Monday, which should release some CNY 1.2 trillion in credit. There were also officially reported statements that China would push affordable housing construction and support the real estate sector.
These actions and statements contradict China’s longer-term goals of reducing dependence on cheap credit flowing into low-return investments, and of reducing the importance of the housing sector to the overall economy, but have become necessary because of the broad economic slowdown China currently faces.
