The ferrous complex went a bit haywire yesterday with prices all over the joint. Spot jumped. Paper roared overnight. Steel fell:
There’s not much new here. We’re just be pushed around within a range. That said, steel mill margins are still getting belted which is a major warning for iron ore going into EOFY.
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In news, there is this:
Port issues for Australian iron ore producers Rio Tinto and BHP continued to weigh on shipments from the four largest producers in the Pilbara region of Western Australia (WA) in the week to 5 June.
The four largest WA producers — Rio Tinto, BHP, Fortescue Metals and Roy Hill — loaded vessels with a combined 16.57mn deadweight tonnes (dwt) of capacity in the latest week, down from 17.09mn dwt in the week ending 29 May. Loadings were 5pc below the average of 17.25mn dwt/week over the past year, with Rio Tinto not shipping anything from its East Intercourse Island (EII) berths at Dampier for the second week in a row and BHP experiencing issues at its Finucane Island terminal at Port Hedland.
The deadweight tonnage is the maximum capacity of the vessel and overestimates actual shipments by around 5pc.
Rio Tinto loaded vessels with 5.6mn dwt capacity in the week to 5 June, down from 5.77mn dwt the previous week and stood 17pc below its annual rolling average of 6.71mn dwt/week. The firm has not loaded iron ore at its 45mn t/yr EII terminal since 20 May but has declined to disclose the reason.
Playing silly buggers with supply?
And there is also this:
The Capesize market has retreated sharply after crossing the key $40,000/day mark in early May as mining majors, trading houses and ship-operators took a breather and dented the strong sentiment witnessed over the last two months.
The downward spiral in the Capesize freight rate continued for a ninth straight session on June 7 with the Platts Cape T4 Index for non-scrubber ships assessed at $19,795/d, down 43.5% over two weeks and falling 55% from $44,233/d — the highest level reached since S&P Global Platts first launched the assessment on Nov. 1, 2019 — on May 5.
We are long past the days of correlation between iron ore and the Baltic Dry but I am taking this as a sign of some easing in upstream supply-side frictions in the global economy.
We are passing through the commodities peak.