Iron ore spot markets surged on Thursday, logging 2018-12-14
Iron ore spot markets surged on Thursday, logging the largest gain in a month.
And with steel and bulk commodity futures continuing to push higher, it looks like there’ll be further gains to come on Friday.
According to Metal Bulletin, the spot price for benchmark 62% fines jumped 2.4% to $68.39 a tonne, adding to the gains achieved in the previous two sessions.
Coincidentally, it was the largest percentage gain since August 6, leaving the benchmark at the highest level since August 13.
However, it remains stuck in the trading range seen since the late March.
Like the benchmark, both lower and higher grades rose on Thursday.
58% fines surged 2.3% to $38.64 a tonne. 65% fines increased by a smaller 0.8% to $95.90 a tonne.
The gains were put down to renewed strength in steel markets, sparked by news authorities in the Chinese city of Tangshan — the largest steel-making centre in the country — have extended production curbs on heady industry, including steel mills.
Previous cuts were set to expire on August 31, having run for six weeks, almost halving the production capacity on some sintering machines and blast furnaces in an attempt to improve air quality.
“The rally on iron ore prices is supported by higher steel prices,” a Shanghai-based iron ore trader told Reuters.
“The market is expected to see even fatter profit margins at mills amid stepped-up environmental measures. Therefore, steel mills would be willing to pay more for raw materials.”
While an extension to the production curbs undoubtedly helped to propel steel prices higher on Thursday, it doesn’t explain the price action in spot markets entirely with low and mid grades outperforming higher quality, more expensive grades.
Production curbs, of course, also raise the potential for less iron ore demand, particularly lower grade. But not on this occasion.
Underpinning the gains in spot markets, Chinese steel futures rallied hard during Thursday’s day session.