Iron ore marches on as output hikes

Seaborne iron ore prices have again charged higher on an expected recovery in steel output this month and in the first and second quarters next year. Early December output is already increasing, as predicted by Kallanish’s own data.

The Kallanish KORE 62% Fe index increased $3.47/t to $119.37/dry metric tonne cfr Qingdao. The Kallanish KORE 65% Fe index appreciated $3.93/t to $138.67/dmt cfr, and the KORE 58% Fe index went up $2.71/t to $89.42/dmt cfr.

On the Dalian Commodity Exchange May iron ore settled up CNY 2/t at CNY 684.5/t ($107.42/t), while on the Singapore Exchange January 62% Fe futures settled up $4.61/t at $124.49/t. The same contract for 65% Fe and 58% Fe futures settled up $4.84/t at $144.85/t, and up $4/t at $84.95/t respectively.

Chinese scrap and billet prices have also been moving higher. 6mm+ heavy scrap delivered to mills in the Yangtze River Delta gained CNY 41/t from Friday to CNY 3,534/t on Monday. Tangshan billet meanwhile increased CNY 60/t since Friday to CNY 4,420/t.

According to the China Iron and Steel Association (CISA), daily crude steel output at its member mills was up 12.66% from late November in the first ten days of December at 1.934 million tonnes/day. That was the highest output since mid-September. As noted in Kallanish China Steel Intelligence, satellite data monitoring of blast furnaces around Tangshan and elsewhere already began to show the recovery in output at some mills since the end of November. 

Steelmakers have hit their production reduction targets and many, though by no means all, are ramping up output to cash in on strong steel margins before the end of the year.

Tomas Gutierrez UK