IRON ORE DAILY: Australian cyclone jitters buoy seaborne prices

Seaborne iron ore prices rose on Friday March 22 after cyclone updates from Australia led to supply concerns and pushed up swaps prices.

MB 62% Fe Iron Ore Index: $85.96 per tonne cfr Qingdao, up $1.47 per tonne.
MB 62% Fe Pilbara Blend Fines Index: $85.08 per tonne cfr Qingdao, up $1.47 per tonne.
MB 62% Fe Iron Ore Index-Low Alumina: $88.35 per tonne cfr Qingdao, up $1.71 per tonne.
MB 58% Fe Premium Index: $77.57 per tonne cfr Qingdao, up $2.44 per tonne.
MB 65% Fe Iron Ore Index: $96.30 per tonne cfr Qingdao, up $0.90 per tonne.
MB 62% Fe China Port Price Index: 623 yuan per wet metric tonne (implied 62% Fe China Port Price $82.78 per dry tonne), down 2 yuan per wet metric tonne.

Key drivers
Severe Tropical Cyclone Veronica was 350 km north to north west of West Australia’s Port Hedland as of 3pm local time on Friday, and was expected to maintain its intensity and move toward the Pilbara coastline in the coming 48 hours, Pilbara Ports Authority said in its most recent update.

Following the news, 62% Fe iron ore swaps on the Singapore Exchange spiked, with the April and May contracts both gaining around $2 per tonne

While it remains unknown how much actual damage the cyclone could bring, supply of Australian iron ore is likely to be disrupted “to quite an extent”, a mill source in eastern China said.

The cyclone is expected to affect port operations at least until Sunday, which will push up prices for seaborne cargoes, a trader said.

The Chinese market responds more swiftly to supply disruptions in Australia than those in Brazilia due to the shorter voyage time to China from Australia, he added.

Others stayed cool over the sustainability of the swaps rise, however, citing limited buying interest in the seaborne market and at Chinese ports.

No seaborne offers appeared on trading platforms during the day, while trading activity also slowed down at Chinese ports amid slightly weaker prices.

Brazilian miner Vale made another update late on Thursday that local authorities had allowed it to resume operations at its 30-million-tonne-per-year Brucutu mine in the next 72 hours, after a court approval earlier this week.

The MB 62% Fe Iron Ore Index, published daily by Fastmarkets MB, rose by $1.47 per tonne, while the daily MB 65% Fe Iron Ore Index increased by $0.90 per tonne. The price movements were based on the visible market activity detailed below, which was included in the index calculation according to the published methodology.

For the calculation of the MBIOI-62 and MBIOI-65, judgement was applied to carry over data in today’s indices due to low liquidity in 24-hour pricing window, corresponding with published fallback measures.

No data was discarded in the calculation of these indices. Any data received under Data Submitter Agreements or subject to a confidentiality request will not be published.

Quote of the day
“So far Chinese mills have remained cautious over high iron ore prices and are thus keeping low inventory levels and buying in small volumes but at a higher frequency,” a trader based in Shanghai told Fastmarkets.

Trades/offers heard in the market
Global Ore, 80,000 tonnes of 62% Fe Jimblebar fines, bid made at the April average of two 62% Fe indices at a discount of $4 per tonne, laycan April 1-10.

Spot market, 65% Fe low-sulfur Ukrainian concentrate, offered against a 65% Fe index at a premium of $2 per tonne.

Port prices
Pilbara Blend fines traded at around 615-620 yuan per wmt in Tangshan city and Shandong province during the day, compared with 615-625 yuan per wmt a day earlier, sources told Fastmarkets.

The latest price range was equivalent to $81.70-82.40 per tonne cfr China.

Dalian Commodity Exchange afternoon close
The most-traded May iron ore futures contract closed at 615.50 yuan per tonne on Friday, up by 3.50 yuan per tonne from Thursday’s closing price.

Deepali Sharma in Singapore contributed to this article.

July Zhang

july.zhang@fastmarkets.com

Published

July Zhang

March 22, 2019

12:31 GMT

Shanghai