Monday, April 26, 2021

Platts' "Commodity Tracker: 6 charts to watch this week"

First off, some housekeeping. I was told earlier today that the link to Platts on April 12 did a 'strange loop' back to our blog, coming dangerously close to a self-referential vortex of market depravity.
(apologies to Cardiff Garcia and/or the headline writer of 2012's "Rally Monkey gets sucked into the self-referential vortex of psychologically important thresholds")
This has been corrected. Regret the error.

 From S&P Global Platts, April 26:

After significant new national pledges on carbon emissions last week, commodity markets are digesting the implications. Plus, India's coronavirus resurgence, crude oil trade flows, and iron ore pricing and fundamentals. 

....6. Iron ore 62% Fe prices hit 10-year high, 65% Fe premiums widen

key iron ore prices 65% 62% Fe

What's happening? Iron ore prices hit a 10-year high on April 20 at $187.75/dry mt CFR China and closed in on record levels of February 2011 after steel demand and prices rose. In Australian currency terms, prices last week hit a record A$240/dry mt CFR China, benefitting producers such as Rio Tinto, BHP and Fortescue from China's largest supplier country. Iron ore demand has seen support from wider steel-iron ore price spreads and stronger margins in China and global markets. Demand for higher-grade iron ores boosted 65% Fe fines premiums to record highs, as import prices outpaced the effect of operating restrictions. China's pig iron output in the first quarter rose 7.2% on a year earlier, following declines in February and March 2020 from the COVID-19 pandemic.

What's next? Potential for firmer policies from China to taper steel and pig iron growth rates during the balance of 2021, and growing demand for ferrous scrap to cut emissions, could weigh on iron ore prices. After steel output in northeast China's Tangshan was curtailed during Q1, Handan issued plans last week to control steel output and eliminate some outdated production facilities. Scrap has become more competitive, and the market will also be watching scrap and steel trade activity in Turkey, India and the Middle East following the current slowdown. Meanwhile, Brazilian iron ore shipments could recover after a weak Q1 and stronger production from Australia is also likely given seasonal trends, with improved supply expected in coming months....