Seaborne iron ore prices increased on Monday even as steel futures pulled back. Comments on inflation and the absence of a revision to export rebates created confusion in markets.
The Kallanish KORE 62% jumped $2.39/t to $172.48/dry metric tonne cfr Qingdao. The Kallanish KORE 65% Fe index broke through the $200/t barrier on Monday, gaining $2.81/t to $202.68/dmt cfr. The KORE 58% Fe index meanwhile increased $0.58/t to $154.92/dmt cfr.
On the Dalian Commodity Exchange September iron ore settled up CNY 11.5/t at CNY 990/t ($151.05/t), while on the Singapore Exchange May 62% Fe futures settled up $1.27/t at $166.65/t. The same contract for 65% Fe and 58% Fe futures settled up $1.50/t at $199.34/t, and up $2.19/t at $150.87/t respectively. In Tangshan, billet prices fell CNY 80/t, after falling CNY 70/t on Sunday, to CNY 4,390/t.
China’s long-awaited announcement on a change in stell export tax rebates again failed to materialise over the weekend. As the change would restrict exports, it would mean more pressure on Chinese steel production and has been seen as negative for iron ore.
Over the weekend, meanwhile, government departments noted that producer price inflation was being driven higher by commodity prices. If controlling inflation becomes a bigger priority than reducing steel output, then inflationary policies such as production restrictions could be less strongly enforced. This would support iron ore demand.
Market movements so far, however, have been entirely speculative this week. Until further policy announcements are made, markets could remain in a state of confusion.
