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Surging iron ore market

There was a major surge in the seaborne iron ore spot market on Friday as demand and confidence returned to energize a nearly two-week rally. Platts assessed its 62% Fe Iron Ore Index up $3.75 from Thursday to $58.50/dry mt CFR North China.

Since plunging to $47.50/dmt on April 5-6, the IODEX benchmark has moved $11/dmt higher, gaining +23%. This week alone the price gained more than 14%, up $7.25/dmt since Tuesday.

Platts learned that demand for seaborne iron ore was firming all day Friday as more buyers emerged to seek spot material—believing the market is now in strong recovery mode. Meanwhile, a number of sellers said they expected the rising market to continue — and many were holding back their offers.

Contributing to the spot market’s surge was an erosion of iron ore dockside stocks. Iron ore stocks at China’s major ports were 97.16 million mt, down 0.42 million mt on week, according to the latest industry report.

Yet again, another key raw material—metallurgical coal—moved in the opposite direction. Platts’ benchmark premium low-vol hard coking coal assessment declined by a nickel Friday to $87.15/mt FOB Australia.

At a glance:

Friday’s physical steel square billet price in Tangshan, a closely watched indicator of steel demand in China, gained Yuan 40 to Yuan 2,070/mt ($338) ex stock.
Steel rebar futures strengthened Friday, with the most liquid October contract in Shanghai last trading at Yuan 2,378/mt ($503.75), up Yuan 55/mt from Thursday, and settling at Yuan 2,365/mt, up Yuan 43/mt.
Iron ore futures on the Dalian Commodity Exchange also gained Friday, with the most liquid September contract last trading at Yuan 417.50/mt, up Yuan 18.50 from Thursday, and settling at Yuan 412.50/mt, up Yuan 11/mt.
The scrap to iron ore price ratio (measured by comparing Platts 62% Fe IODEX and its heavy melting scrap price CFR Turkey) narrowed Friday to 1: 4.7, with scrap 3.2 times the cost of iron ore on an iron unit equivalent basis.
Year-to-date average price for the 62% Fe IODEX benchmark is $59.80/dry mt CFR North China, which compares to $119.37/dmt for the same period a year ago.
Source: Platts IODEX