Iron ore, scrap surge in China

Seaborne iron ore prices and Chinese scrap prices have both surged. Restocking drove iron ore to a new record high, while Chinese mills have also hiked their scrap purchasing prices.

The Kallanish KORE 62% Fe index increased $4.61/t to $186.19/dry metric tonne cfr Qingdao. The Kallanish KORE 65% Fe index gained $5.13/t to $219.72/dmt cfr, and the KORE 58% Fe index leapt $9.67/t to $164.17/dmt cfr. All were at record highs. A total of 170,000t of Brazilian Blend sold at $194.4/t with a laycan in 21-30 May.

On the Dalian Commodity Exchange, September iron ore settled up CNY 40/t from Friday at CNY 1,137/t ($175.07/t), while on the Singapore Exchange May 62% Fe futures settled up $6.47/t at $187.53/t. The same contract for 65% Fe and 58% Fe futures settled up $6.62/t at $222.50/t, and up $10.58/t at $167.08/t respectively.

Chinese scrap prices have also increased sharply. Variety 6mm+ heavy scrap delivered to mills in the Yangtze River Delta region hit CNY 3,532/t on Monday, up CNY 41/t from Friday. Almost every mill in the region, including Shagang, has increased its purchasing prices by CNY 30-50/t over since Friday. In Tangshan, billet prices were flat on Monday at CNY 4,980/t, after increasing CNY 30/t over the weekend. 

In the short term iron ore is being pushed higher by mill restocking ahead of the 1-5 May Labour Day holiday. Restrictions in Tangshan did little to interrupt this, as they only apply for two days. Chinese brokerage Horizon Insights meanwhile expects prics supported into May on the back of lower arrivals at ports. It says China’s iron ore market could be in deficit by 3.8 million tonnes in May, leading to a decline in port stocks.

Tomas Gutierrez UK