Iron ore slumps as cutbacks force resale

Seaborne iron ore prices fell sharply on Monday as they fell off another step on the road down from their previous unsustainable highs. Restriction policies have undermined sentiment, while some mills have begun selling excess iron ore on the open market.

The Kallanish KORE 62% Fe index slumped $10.66/t to $133.23/dry metric tonne cfr Qingdao, the lowest since 19 August. The Kallanish KORE 65% Fe index collapsed $10.91/t to $153.57/dmt cfr, while the KORE 58% Fe index fell $1.72/t to $109.72/dmt cfr.

On the Dalian Commodity Exchange January 2022 iron ore settled down CNY 19.5/t at CNY 755/t ($116.79/t), while on the Singapore Exchange October 62% Fe futures settled down $11.86/t at $131.12/t. The same contract for 65% Fe and 58% Fe futures settled down $12.09/t at $152.39/t, and down $3.49/t at $107.75/t respectively.

Scrap and billet prices, like steel futures, have not been impacted by the slump. 6mm+ heavy scrap delivered to mills in the Yangtze River Delta increased CNY 3/t to CNY 3,801/t on Monday. In Tangshan, billet prices increased CNY 20/t over the weekend and another CNY 20/t on Monday to CNY 5,100/t.

Production cuts are beginning to have an additional negative effect on iron ore markets. Some mills in southern China are now reportedly selling off iron ore delivered under their long-term contracts. The release of new restriction measures for the winter also confirmed that production levels would be limited for at least the rest of the year and into 2022.

Tomas Gutierrez UK