Iron ore tops $100 on Chinese recovery

Seaborne iron ore prices topped $100/tonne on Wednesday for the first time since 4 November. Vale’s announcement that it would increase production in 2022 was still supportive, with its new guidance falling below some analysts’ expectations.

The Kallanish KORE 62% Fe index gained $4.95/t to $101.85/dry metric tonne cfr Qingdao. The Kallanish KORE 65% Fe index increased $5.33/t to $117.18/dmt cfr, and the KORE 58% Fe index appreciated $3.65/t to $71.58/dmt cfr.

On the Dalian Commodity Exchange January iron ore settled up CNY 18/t at CNY 600.5/t ($93.99/t), while on the Singapore Exchange December 62% Fe futures settled up $4.31/t at $103.05/t. The same contract for 65% Fe and 58% Fe futures settled up $4.76/t at $117.77/t, and up $1.75/t at $70.72/t respectively.

Both Chinese scrap and billet prices also continued to increase. 6mm+ heavy scrap delivered to mills in the Yangtze River Delta increased CNY 33/t to $3,192/t. In Tangshan, billet prices increased CNY 60/t to CNY 4,320/t.

Vale is reportedly seeking board approval this week for a production guidance of 330-350 million tonnes in 2022. The miner has said output this year would be in the bottom half of its guidance of 315-335mt. Expectations however were for Vale to produce at least in the top half of its reported guidance for 2022, and perhaps more.

In China, meanwhile, expectations of a pick-up in crude steel production continue. Improved weather and freer lending to real estate have caused a short-term improvement in steel demand.

Tomas Gutierrez UK