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November, 12th 2019

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OCT 15
15:14

Iron ore prices rebound despite doubts

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Seaborne iron ore prices rebounded on Tuesday despite doubts over the economy. Tangshan meanwhile has added another layer of restrictions, but the impact on iron ore is unclear.

The Kallanish KORE 62% Fe index recovered $0.87/tonne to $92.61/dry metric ton cfr Qingdao. On COREX, 170,000 tonnes of Brazilian Blend sold at $91.6/t with a laycan in 10-19 November. On the Dalian Commodity Exchange January 2020 iron ore settled at CNY 637.5/t ($89.79/t), down CNY 14/t, while on the Singapore Exchange November 62% Fe futures settled up $1.35/t at $87.86/t. In Tangshan, billet prices slipped CNY 30/t to CNY 3,370/t.

Continued economic concerns and weak steel demand continue to hang over the market. This was exacerbated on Tuesday with report of further restrictions in Tangshan. As of 20.00 on Tuesday, new restrictions will be imposed and no end date has been set. A grade steelmakers will independently reduce production, B grade companies will stop sintering, pelletising and lime kilns and extend coking times. C grade steelmakers meanwhile will do the above plus limit blast furnaces to 50% of capacity.

The impact of the restrictions has yet to be seen. Many of these restrictions are already in place on C grade steelmakers, which make up the bulk of capacity in Tangshan. The announcement does suggest however that officials remains under some pressure to show they are limiting pollution even as the body politic is increasingly focussed on the slowing economy.