Seaborne iron ore prices jumped again on Friday as Chinese mills continue to ramp up production despite slow domestic steel demand. Increasing steel export opportunities are giving mills confidence to hike production despite a slow domestic market.
The Kallanish KORE 62% Fe index gained $7.57/t to $150.38/dry metric tonne cfr Qingdao. The Kallanish KORE 65% Fe index increased $6.85/t to $179.59/dmt cfr, and the KORE 58% Fe index appreciated $4.73/t to $130.75/dmt cfr.
On the Dalian Commodity Exchange, May iron ore settled up CNY 19.5/t at CNY 824.5/t ($129.60/t), while on the Singapore Exchange April 62% Fe futures settled up $4.17/t at $152.82/t. The same contract for 65% Fe and 58% Fe futures settled up $3.73/t at $180.39/t, and down $0.06/t at $132.79/t respectively. In Tangshan, billet gained CNY 20/t to CNY 4,720/t.
Chinese steel output has continued to recover, and this has led to mills drawing down stocks from ports. Across 35 ports, iron ore stocks fell 3.17 million tonnes to 150.07mt, according to SMM. The easing of production limitations and lower deliveries to ports helped bring inventories lower.
One factor is the more positive outlook for steel exports. International prices are high following the Russian invasion of Ukraine, and suppliers to Southeast Asia have been distracted by opportunities in the European market. Mills are happy to boost output in the knowledge they will be better able to export any excess production this year than in recent years.
Tomas Gutierrez UK