Here are the iron ore charts for March 17, 2016:
The spot rocket returned with Tianjin benchmark leaping 5.5% to $55.40. Paper launched in Singapore and Dalian ripped limit up overnight to knew highs at around $55 spot equivalent. Reuters has texture:
Chinese steel demand could pick up steam by end-March or early April with construction activity thickening as the weather gets warmer, said Richard Lu, analyst at consultancy CRU in Beijing. “But we do not think the support from seasonal demand will be strong enough to lift prices sharply,” said Lu. He said spot prices of construction steel products in China, including rebar, continued to drop after last week’s rally that was fueled by speculative buying.
“These days of volatility on iron ore derivatives will continue, but on the physical side the downward trend will continue as well,” said a Shanghai-based trader.
I have never seen such wild iron ore trading. Usually the Fed has only a minor impact if any at all. Financialisation is here in earnest. Though Vale probably helped put a fire under Dalian overnight, from Reuters:
Brazilian miner Vale SA said on Thursday it could lose as much as 100 million tonnes of annual iron ore output in the southeastern state of Minas Gerais over the next three years due to pending environmental licenses.
The world’s largest iron ore producer, in an email sent to Reuters, said licenses for 88 projects were still being analyzed. If they were not approved, consequent shutdowns would halve Vale’s output in the state.
Production cuts could come as soon as the next few months, Vale said, as its 30 million-tonne-per-year Brucutu mine requires a license for a connected dam.
If this happens, all bets are off. My guess is it will not take long to resolve given that it’s not in Brazil’s interest to lose market share. Once lost it is very hard to regain. But it’s a pure guess and in this environment if it this does run then iron ore could do anything.
In the meantime, the price spike continues to trigger a renewed supply frenzy. Sino is moving on Mutun in Bolivia:
Sinosteel Engineering & Technology announces that Sinosteel MECC, a wholly-owned subsidiary, is holding negotiations on the Mutun Iron Ore Mine project with Bolivia’s state-owned Empresa Siderurgica del Mutun (ESM).
The project covers feasibility research, design, construction, equipment installation, commissioning and one-year production services after operation of dressing, direct reduction iron, steelmaking, steel rolling and support facilities.
It’s an enormous deposit but low grade so requires high prices. Kiwis are moving on Flinders:
FLINDERS Mines shares have surged after the Pilbara-focused iron ore junior received a $38 million takeover offer from New Zealand firm Todd Corporation.
Todd Minerals, a subsidiary of Todd Corporation, said on Thursday it had made an unconditional cash off-market bid to acquire all Flinders shares at 1.3 cents a share.
Last year, Flinders shareholders rejected a proposal by Todd to buy its key Pilbara iron ore project, a proposed $800 million, 25 million tonne port, rail and mine project in northwestern Australia.
India is ramping up sales:
State-run Odisha Mining Corporation (OMC) would offer 190,000 tonne of iron ore from its flagship Gandhamardhan mines at next round of e-auctions on March 18.
The auctions would be conducted on the platform provided by central PSU MSTC Ltd.
Wild times.
