Daily iron ore price update (all about Vale)

Iron ore price charts for January 15, 2019:

Spot is strong. Paper following. Steel is is OK. This is perfectly normal for this time of year:

Iron ore imports in December boomed on seasonal restocking, hitting 101.3mt the thrid highest ever and enough to finally flop into the positive on the rolling annual for a bit:

It’ll go until Lunar New Year and prices will remain strong as Vale drags the chain on its rebound, disapointing again in December:

Brazilian shipments are still tracking at down 6mt per month instead of the 4mt that they should be. I don’t know why.

But, underneath this, demand is weak. Spreads between low and high quality ore continue to blow out with 58% purity now roughly discounted by a quarter. The Chinese steel PMI sucked again in December as well:

And the bulks rally is crushing steel profits (though coking coal is still at $151):

In short, Vale weakness remains the key to firm pricing. Everything else is rubbish.

Expect prices to fall post-Luna New Year then fall a lot more in March/April. Whether prices fall back sustainably after that will depend upon the Vale recovery. Given it should be pumping more ore already, there has to be some question over what it is actually up to.

David Llewellyn-Smith
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