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Kallanish Kallanish

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July, 11th 2020

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JUN 02

Steel, iron ore gain further


Chinese steel futures pries and seaborne iron ore prices both increased on Tuesday. The key driver remains iron ore supply however, with steel demand holding at high levels.
On the Shanghai Futures Exchange the October rebar contract closed CNY 57/tonne higher than Monday at CNY 3,634/t ($511/t), while the same contract for hot rolled coil closed up CNY 26/t at CNY 3,575/t. In Tangshan, billet prices were flat at CNY 3,310/t.
The Kallanish KORE 62% Fe index gained $0.72/t to $101.57/dry metric tonne cfr Qingdao. The Kallanish KORE 65% Fe index however fell $0.51/t to $115.61/dmt cfr, and the KORE 58% F index dropped $0.79/t to $89.75/dmt cfr. 90,000t of Jimblebar Fines sold at a floating price.
On the Dalian Commodity Exchange September iron ore settled down CNY 4.5/t at CNY 752/t ($105.68/t). On the Singapore Exchange, July 62% Fe futures settled up $0.85/t at $98.12/t. The same contracts for 65% Fe and 58% Fe futures meanwhile settled up $0.93/t at $111.53/t, and up $0.38/t at $88.37/t respectively.
The continued increase in 62% Fe iron ore prices over $100/t is squeezing steelmaking margins. Mills are trying to pass on increases to the market, but traders remain wary. Steel demand has already reached elevated levels, and will struggle to improve further. Steel market inventories meanwhile are falling, but remain at high levels. With iron ore prices expected to decline in H2, traders do not want to be caught again with overpriced inventory.