SINGAPORE, Oct 21 (Reuters) - Spot iron ore prices rose to above $81 a tonne as Chinese steel producers restocked, although the supply of available cargoes remained high and kept a lid on gains. Mills in China's Tangshan area in the northern Hebei province were buying more iron ore ahead of planned shutdowns at the start of November, said a trader in Shanghai. Some steel mills in Hebei - China's top steel producing province - have been asked to reduce or suspend production during the APEC meeting in China next month to help improve the air quality in the capital Beijing, according to local media reports. "The shutdowns may take almost two weeks and some of the mills are trying to increase production ahead of that," the trader said. Iron ore for immediate delivery to China .IO62-CNI=SI rose 0.7 percent to $81.20 a tonne on Monday, according to data compiled by The Steel Index. Iron ore, China's biggest import commodity by volume, has regained some ground since falling to a five-year low of $77.50 at the end of September, hit hard by abundant supply as low-cost top miners such as Rio Tinto and BHP Billiton expanded output in the face of weak demand. The most-traded iron ore contract for delivery in January on the Dalian Commodity Exchange climbed 1.2 percent to 583 yuan ($95) a tonne. Iron ore futures in Singapore <0#SZZF:> also edged higher. China's daily crude steel output reached 2.25 million tonnes in September, up 1 percent from August and the highest since the record 2.31 million tonnes in June, suggesting mills were still at close to full capacity despite a long price slump. The most-active rebar for May delivery on the Shanghai Futures Exchange gained half a percent to 2,620 yuan a tonne. Rebar, used in construction, hit a record low of 2,507 yuan earlier this month. The futures price remains at a steep discount to spot rebar prices, which were quoted at around 3,000 yuan a tonne on Tuesday, according to data compiler SteelHome. "This points to rebar futures being oversold and should provide some support to rebar futures prices near term," ANZ Bank analysts said in a note. China produced 67.54 million tonnes of crude steel in September, down 2 percent from the previous month and flat compared to the corresponding month of 2013, data from the National Bureau of Statistics showed. Data on Tuesday also showed China's economy grew 7.3 percent in the third quarter, its slowest pace since the 2008/09 global financial crisis, as a slumping property market hit manufacturing and investment. The slowdown reinforced expectations that Beijing will need to unveil more stimulus measures to avert a sharper slowdown.
Spot prices of seaborne iron ore lump have climbed for a third week, lifted by a scramble for November-shipment cargoes as seasonal demand strengthened for the material as a substitute for sinter and pellet.
Platts assessed the weekly spot lump premium at $0.1775/dry mt unit, up $0.03/dmtu week on week. The premium, assessed Tuesday this week because of a Singapore public holiday Wednesday, is normalized to a CFR basis and expressed over the IODEX fines assessment.
As steelmakers sought to buy lump for November, when operations at some sintering units in Hebei province may be cut to improve air quality for a major conference in Beijing, mill sources have reported being unable to find supplies.
One trading source also said BHP Billiton had already sold all its lump for that month, something the miner does not comment on.
"Last week when we tried to buy lump, traders were at least able to reply with some offers," said a source at a mill based in Central China. "But this week, traders no longer have material for us to negotiate over."
Offers were heard at as high as a $0.20/dmtu premium on a CFR basis to the IODEX, and some mills, likely with supply secured through term contracts, said they would look to pay a premium of, at most, $0.14-0.16/dmtu.
Rio Tinto sold a 70,000 mt cargo of Pilbara Blend lump Monday at $93/dmt CFR Qingdao in a single shipment loading November 7-16, which, when compared with the price at which PB fines traded on the same day at $81.80/dmt CFR Qingdao, yielded a calculated premium of about $0.18/dmtu.
Already last week, signs of a sharper rise in prices could be seen in the Thursday sale of a 110,000 mt cargo of 63.2%-Fe Newman Blend lump loading November 16-25 at a premium of $0.1856/dmtu FOB basis to the November average of the IODEX.
This normalized to $0.1785/dmtu on a CFR basis, after taking into account underlying moisture differences in the fines and lump indexes and a freight assessment of $7.15/wet mt for the Port Hedland-Qingdao route for Capesize vessels, Platts calculations showed.
Spot lump demand had also firmed as a result of winter restocking by steelmakers, a source in Hebei said.
"It is still unclear how much domestic concentrate production will decline in winter, but it definitely will during the colder months," he said. "Even before winter, we already are hearing of some domestic mines shutting down."
Libya’s OPEC governor, Samir Kamal, believes OPEC needs to reduce crude oil output by at least 500kb/d, which would bring down the group’s official production target to 29.5mb/d. The Libyan official also estimated that crude oil markets are currently oversupplied by ~1mb/d. OPEC is meeting on 27 November to discuss crude oil production targets for 2015.
Zinc led base metals higher, rising the most in two weeks as LME zinc inventories fell to their lowest level since August. Gold futures fell as the US dollar strengthened and as muted US inflation in September weakened the appeal of the precious metal as an inflation hedge. US WTI crude oil fell as US crude oil inventories rose higher than forecast last week. Iron ore was unchanged at USD81.83/t (CFR China) due to a public holiday in Singapore.
US crude oil inventories rose by 7.1mmbbl to 377.7mmbbl in the week ending 17 October, well above forecasts of a 2.8mmbbl increase. In the same week, US oil production fell from a 29-year high of 8.951mb/d to 8.934mb/d, while imports decreased to 7.477mb/d. The US refinery utilisation rate fell from 88.1% to 86.7%.
According to the International Nickel Study Group (INSG), world nickel markets have sustained a surplus of 13.7kt from January to August, down from 89kt for the same period last year. The total size of the nickel market is ~2Mt.
The International Copper Study Group (ICSG) estimates that world copper markets have been in a deficit of 589kt from January to July, which compares to a surplus of 22kt for the same period last year. The group estimates that July saw the first surplus of copper this year. The size of the copper market is ~21Mt.
Vale’s iron ore output, excluding its share in the Samarco Mineracao venture, rose by 3.1% y/y to a record-high 85.7Mt in 3Q14, above market forecasts of 83.3Mt. The company’s nickel output rose by 16% y/y to 72.1kt in the September quarter, above forecasts of 68.8kt. Vale’s copper output increased by 11% y/y to 104.8kt, above forecasts of 98.8kt.
Base metals finished mostly lower despite preliminary gauges of the manufacturing sectors in China and Europe beating forecasts in October. The better-than-expected manufacturing data prompted gold futures lower on softer safe-haven demand. Crude oil benchmarks rose on unofficial reports that Saudi Arabia’s crude oil supply to the market fell by 328kb/d to 9.36mb/d in September, easing surplus concerns. Iron ore fell by 1.9% to USD80.29/t (CFR China).
The US Markit ‘flash’ manufacturing gauge fell from 57.5 to 56.2 in October. Across the sub-indices, new orders growth eased markedly, with new export sales falling sharply.
Anglo American has lifted its full-year iron ore production forecast from 44-46Mt to 45-46Mt after 3Q14 iron ore output rose by 37% y/y. The company also raised its full-year production guidance of metallurgical coal from 20Mt to 21Mt and copper from 740kt to 745kt. The company expects to ship iron ore from its 26.5Mtpa Minas Rio iron ore project in Brazil by the end of the year.
China’s coking coal imports declined by 37.9% y/y to 4.5Mt in September, while its average coking coal price fell by 18.4% y/y to USD95/t. China’s LNG imports fell by 8.1% y/y to 1.39Mt in September, while its average realised LNG price rose by 3.0% y/y to USD13.1/mmbtu.
US natural gas inventories rose by 94bcf last week, below forecasts of a 98.38bcf increase.
SINGAPORE, Oct 23 (Reuters) - Chinese steel and iron ore futures dropped on Thursday, extending losses from the previous session as growth in supply continued to outpace demand in the world's top consumer of the two commodities. Amid slowing economic growth in China, demand for steel is unlikely to see "any obvious improvements", the China Iron and Steel Association (CISA) said in a report published on its website on Wednesday. "And with steel production remaining at a high level, oversupply will worsen, steel prices are unlikely to recover by a large degree and will continue to fluctuate within a narrow margin," said CISA. A private survey showed China's manufacturing activity quickened to a three-month high in October, although the level of output in factories fell to a five-month low. The most active May rebar contract on the Shanghai Futures Exchange was down 1.3 percent at 2,529 yuan ($413) a tonne by midday. It touched a session low of 2,523 yuan, its weakest since Oct. 10. At the Dalian Commodity Exchange, iron ore for May delivery slid 3.3 percent to 521 yuan per tonne. Iron ore prices have similarly been hit by a glut in supply as top, low-cost miners from Australia and Brazil flood the market with cargoes, hoping to edge out more high-cost producers as prices tumble. Spot iron ore prices have dropped 40 percent this year, hitting five-year lows below $80 a tonne in September. "Supply is getting bigger and demand is getting weaker," said an iron ore trader in China's eastern Shandong province, who has held off plans to purchase cargoes this month amid signs the price rout may not be over. A decline in stocks of iron ore lying in China's ports from late September had helped prices recover some ground, although traders said the port inventory level remains high at more than 100 million tonnes. Stocks of imported iron ore at China's main ports had dropped 1.35 million tonnes to 107.9 million tonnes as of Oct. 17 SH-TOT-IRONINV, according to industry consultancy SteelHome that tracks the data. At that level, the stocks are still up by a quarter for the year. "It's still a big number. Maybe after port stocks come down to below 80 million tonnes, that can help stabilise the market and prices can rise," said the Shandong-based trader. Iron ore for immediate delivery to China .IO62-CNO=MB was little changed at $81.83 a tonne on Wednesday, according to data compiled by Metal Bulletin. A cargo of 58-percent grade Australian Yandi iron ore fines was sold at $72 a tonne on the globalORE platform on Thursday, down from $73.50 for a similar grade earlier in the week, data from the platform's website showed.
Base metals were mixed, despite rising demand concerns in China after new home prices in China fell in nearly all cities monitored by China’s National Bureau of Statistic in September. Nickel continued to fall on surplus concerns, as LME nickel inventories rose to a record high. Crude oil benchmarks finished lower on views that Saudi Arabia’s drop in crude oil output in September isn’t a signal that the Kingdom is committing to production cuts, exacerbating surplus concerns in crude oil markets. Gold futures rose as the US dollar weakened, while alumina remained unchanged at USD356/t (FOB Australia). Iron ore fell by 1.9% to USD80.29/t (CFR China).
BlueScope Steel believes that for the time being the high growth in China’s steel demand is over, highlighting that confidence in China’s building and construction sector has significantly reduced. Building and construction is a key demand driver for steel. The company also said that it is seeing builders move to the US, where growth and opportunities are better and energy costs are lower.
The total number of drill rigs deployed onshore in the US rose from 1,918 to 1,927 last week. Rigs deployed in oil plays lifted from 1,590 to 1,595, just below record highs of 1,609 recorded a few weeks ago. Rigs deployed in gas plays lifted from 328 to 332.
Construction has begun at the 12Mtpa Cameron LNG project in the US. First production is expected in 2018, while full production is anticipated from the beginning of 2019.
Mohsen Ghamsari, Director for International Affairs at the National Iranian Oil Company, does not expect OPEC to reduce its crude oil output ceiling of 30mb/d at its 27 November meeting. Further, Mr Ghamsari suggested that Iran should budget for crude oil prices around USD70-75/bbl in 2015-16, with little prospect of a crude oil price recovery anytime soon. Crude oil benchmarks slipped last night as price forecast downgrades and softer economic data weighed on market sentiment. Brent crude ended 0.9% lower at USD84.55/bbl while US WTI finished 0.4% lower after trading below USD80/bbl in a choppy trading session.
Base metals ended higher with the exception of nickel, and precious metals ended down as investors continue to trim portfolio exposures to gold exchange traded funds. Iron ore fell 1.2% to USD79.52/t as demand wanes ahead of expected steel production cuts before and during the upcoming APEC meetings in Beijing from 7-12 November.
The US Markit ‘flash’ service sector PMI slipped from 58.9 to 57.3 in October – the lowest result since April. Meanwhile, the German IFO business climate index fell from 104.7 to 103.2 in October.
Gold held by exchange traded products fell 0.8% last week to 1,654.2t – the lowest level in more than five years – as investors continued to reduce holdings of gold-backed assets.
AngloAmerican has shipped first iron ore from its Brazilian Minas Rio project. Minas Rio is expected to ramp up to full capacity of 26.5Mtpa over the next 18-20 months.
Futures are not looking good. You can expect to see the arse drop out of the spot price any day now. I didn't think it could happen, but now I'm thinking we could actually see 70. Timmy must be turning in his grave.
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
Futures are not looking good. You can expect to see the arse drop out of the spot price any day now. I didn't think it could happen, but now I'm thinking we could actually see 70. Timmy must be turning in his grave.
The average cost of iron ore should be very close to the cost of production of the most inefficient supplier. So, contrary to the delusional beliefs that prices will rise when marginal producers close, prices are actually going to drop as those marginal producers close. The more the marginal producers cut costs, the lower the iron ore price will go. They cannot win. This is why they are marginal, marginal in every single way imaginable. The marginal producer chases the delusion of a short-term price bubble and forgets that he is marginal on the longer term average. A lot of the fools watching him, make the same mistake.
SINGAPORE, Oct 27 (Reuters) - Iron ore futures in China and Singapore slipped on Monday as traders struggled to sell cargoes in a market hurting from a glut in supply. Iron ore for delivery in May on the Dalian Commodity Exchange had dropped 0.2 percent to 527 yuan ($86) a tonne by 0326 GMT. The December iron ore contract on the Singapore Exchange fell 0.8 percent to $79.21 per tonne. "It's been difficult to conclude some deals because of the recent volatility in the market," said a Shanghai-based iron ore trader. Spot iron ore prices rose to a near one-month high of $83.10 a tonne in mid-October, after touching a five-year low of $77.50 at the end of September, as Chinese mills replenished stockpiles. But the gains proved fleeting as prices soon came off and traded below $80 last week. Iron ore for immediate delivery to China .IO62-CNI=SI eased 0.3 percent to $79.80 on Friday, according to data compiled by The Steel Index. The steelmaking raw material dropped nearly 1 percent last week, its first such decline in four weeks. "If the market goes up too quickly you worry whether the seller is going to perform on the deal. But if the price drops you worry whether the buyer would walk away. That's why we just want to get our hands on their LC (letter of credit) as soon as we can," the trader said. Iron ore - the top revenue earner for global miners Vale , Rio Tinto and BHP Billiton - has struggled to recover since falling below $100 a tonne in mid-May. The commodity has lost 40 percent of its value this year, hit hard by a flood in supply as China's demand growth slows. Vale, Rio and BHP all mined a record amount of iron ore over the past quarter, aiming to edge out more high-cost suppliers to ship more cargoes to China as prices slide. "I still think we have yet to reach the bottom. There has been resistance from the market on the rally we saw earlier this month," said another trader in Shanghai. The most-traded rebar for January delivery on the Shanghai Futures Exchange was up 0.4 percent at 2,551 yuan a tonne, not far above last week's trough of 2,523 yuan.
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