Iron ore soars to seven-month high

Seaborne iron ore prices have surged to their highest since August last year. China’s new GDP targets imply a certain amount of stimulus, while the threat to supply chains is encouraging speculation in higher prices.

The Kallanish KORE 62% Fe index leapt $8.13/t to $157.64/dry metric tonne cfr Qingdao. The KORE 65% Fe index jumped $8.29/t to $188.33/dmt cfr, while the KORE 58% Fe index grew more modestly by $2.49/t to $131.29/dmt cfr.

On the Dalian Commodity Exchange, May iron ore settled CNY 29/t higher at CNY 841.5/t ($133.18/t), while on the Singapore Exchange April 62% Fe futures settled up $9.05/t at $165.88/t. The same contract for 65% Fe and 58% Fe futures settled up $9.85/t at $195.92/t, and up $2.42/t at $134.71/t respectively. 

6mm+ heavy scrap delivered to mills in the Yangtze River Delta jumped CNY 43/t to CNY 3,703/t. In Tangshan, billet prices increased CNY 60/t over the weekend and another CNY 70/t on Monday to CNY 4,810/t.

China is targeting some 5.5% GDP growth this year, the lowest in decades. Even this however will require stimulus, and this is what markets appear to be banking on (see separate article). They have been given additional confidence in this by the global tight commodity supply chain as markets react to the Russian invasion of Ukraine. This has a direct impact on iron ore supply, especially for pellet. It is also having a general inflationary effect through energy prices, which are driving the cost of almost everything higher.

Tomas Gutierrez UK