Here are the iron ore charts for June 19, 2014:
Paper markets were mixed with rebar futures weak as well. Physical iron ore is showing the return of buyers with spot firming and the Baltic Dry capesize exploding 8%. Weakness in rebar average, however, tells you that this is probably bargain hunting only. Texture from Reuters:
Buying interest for spot cargoes picked up after a recent rapid fall in prices with miners selling via tenders, private deals and the globalORE platform, traders said.
Top iron ore supplier Vale is offering two cargoes of its Brazilian iron ore fines, with total volume of nearly 300,000 tonnes, in tenders closing on Thursday, traders said.
Second-ranked Rio Tinto is offering a 170,000-tonne cargo of its 61 percent grade Australian iron ore fines in a separate tender, traders said.
…But traders say the available iron ore supply still trounces China’s needs.
“I’m not sure the market has reached a bottom. There’s too much stocks at the ports and the price at the ports is much cheaper than fresh seaborne cargoes,” said a Shanghai-based trader.
Sounds right. In other news, the WSJ has some interesting material on the missing metal scandal. It refers mostly to copper but has implications for iron ore:
Traders have used metals as collateral to bring some $110 billion into China since 2010, Goldman SachsGS 0.00% Group Inc. estimates. Traders who import the metal use the commodity to secure loans from abroad.
…Customs officials are taking longer to clear metal imports since the allegations of fraud emerged, traders say. “Customs are taking anywhere from 15 to 20 days to up to a month to clear shipments of copper cathodes. Earlier, it used to take seven to 10 days,” said a Qingdao-based metals trader.
…Imports in the months ahead could be even weaker, traders say. Many banks are starting to withhold letters of credit that are used in commodities financing, they add.
“Things are getting worse and worse. Imports have shrunk in May. It could fall even further in June and July,” said an executive with a Hong Kong-based commodities trading company. “Already, people are finding it very difficult to open letters of credit for import of copper and other metals in banks in China.”
…Some traders say imports could fall more sharply beginning in August. That is because purchases are made in advance: Problems with financing now would take a couple of months to show up in lower shipments.
Also referring to August, from the Business Standard:
The Odisha directorate of mines has sent a recommendation to the state steel and mines department to allow transportation of iron ore from 18 of the 26 mines for whichmining was suspended on May 16 this year, following aSupreme Court order in this regard.
The state government had allowed mining operation to continue at eight other mines.
“We have already sent our recommendation to the government. The government has to take a decision on whether to allow this or not,” said an official at the directorate of mines.
The article says August is the likely approval time frame. That would return Odisha to most of its former output. Still a tough few months ahead for iron ore.
