Iron ore rebounds into a new range

Seaborne iron ore prices rebounded on Friday after their cliff-edge dive on Thursday. Expectations for prices remain confused, but Friday suggested they were settling into a new range.

The Kallanish KORE 62% Fe index regained $8.36/tonne to $140.73/dry metric tonne cfr Qingdao. The Kallanish KORE 65% Fe index increased $7.26/t to $165.48/dmt cfr, but the KORE 58% Fe index appreciated only $3.70/t to $118.90/dmt cfr. 170,000t of PB Fines sold at $136.90/t with a laycan of 25 September-4 October.

On the Dalian Commodity Exchange, January 2022 iron ore settled down CNY 10.5/t at CNY 765/t ($117.71/t), while on the Singapore Exchange September 62% Fe futures settled up $8.03/t at $138.63/t. The same contract for 65% Fe and 58% Fe futures settled up $7.31/t at $156.96/t, and down $1.76/t at $120.33/t respectively. In Tangshan, billet was flat at CNY 4,880/t.

Recovering steel and iron ore futures prices on Friday helped reassure the market that the sell-off on Thursday was too far, too fast. After taking another big step lower, prices are now again expected to settle into a new level. Views are mixed on whether any further step down in prices is needed, but with every step down the previous sense that ore was overpriced has faded.

Across 35 Chinese ports iron ore stocks increased 1.68 million tonnes to 120.33mt, according to a count by SMM. This was despite lower deliveries into stocks. Mills restocking needs were low last week, and restrictions or maintenance reduced demand in Tangshan and Jiangsu. Some mills restocked a little after the sharp drop in prices however.

Tomas Gutierrez UK