High China Iron Ore Port Stocks Not the Whole Story

Date Mar 19 2018 16:37:23 Source:
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Not surprisingly, any discussion of iron ore prices in top consumer China inevitably involves some reference to import stock inventory.

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So when Reuters reports that the Dalian commodity exchange May iron ore contract pricetouched a low of 475.50 yuan per ton this week and China’s Qingdao port price dropped below $70 per ton — the lowest since Dec. 11 — analysts readily refer to record port stocks as being the cause.

Port inventory stood at 158.6 million tons at the end of last week, closer to the previous week’s record of 159.1 million times, according to a separate Reuters article. The article goes on to explain why headline port stocks are far from the whole story. China’s environmental crackdown on polluting industries this winter has driven steel mills to favor high-purity minimum 62% iron ore grades, supplied by firms like Australia’s Rio Tintoand BHP Billiton, Brazil’s Vale, and South Africa’s Kumba, over lower 58% Fe grades, such as Australia’s Fortescue Metals group and some Indian suppliers.

Much of the rise in import stocks has been a buildup of low-grade iron ore shunned by steel mills keen to avoid the pre-blast furnace upgrading needed for lower grades or the increased consumption of polluting coking coal that the protracted smelting of lower grades requires.

To underline how the market has favored higher grades this year, the price delta between 58% and 62% material has widened from the 29% gap that prevailed at the end of 2016 to a price difference this week of $68.78 per ton for the 62% and $40.36 per tonne for the 58% — about a 41% discount.

The import and consumption of higher-grade iron ore has been broadly steady, Reuters reports, while much of the port stock increase has been a buildup of low-grade material.

How, or if, this will resolve itself in 2018 remains to be seen.

One solution, Reuters suggests, would be for China’s pollution restrictions to be eased, allowing steel mills to use the lower-grade material. But that seems counter to the authority’s policy direction over the last 12 months and, therefore, unlikely.

The other, more likely option is that the discount for lower-grade ore will continue widening, Reuters reports, with the owners forced to accept heavy losses as a result.

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The steel market has been buoyant of late, as steel mills build stockpiles in anticipation of the construction season due to get underway with the spring weather. Stockpiles, however, are already quite high. Although rebar prices have picked up on the back of robust industrial output and fixed asset investment, figures recently released for the January-February period show gains have been modest as traders wait to see how many steel mills restricted during the winter season are allowed back on the stream.

BRIEF-Harmony Gold Mining Says Remains On Track To Achieve FY Group Production Guidance Of 1.1MOZ​HA

Date Mar 19 2018 16:28:51 Source:Reuters
    March 19 (Reuters) - Harmony Gold Mining Company Ltd HARJ.J :

Edited by SHMET

Gold falls for fourth day as dollar stays firm ahead of Fed meeting

Date Mar 19 2018 16:17:34 Source:Reuters
    * Investors eye Fed policy projections
    * Platinum touches lowest in over 2 months

 (Updates prices)
    By Eileen Soreng
    March 19 (Reuters) - Gold prices extended losses into a fourth session on Monday and hit a more than two-week low, with
the dollar remaining supported as investors expect the U.S.Federal Reserve to raise interest rates this week.
    Spot gold  XAU=  was down 0.2 percent at $1,310.03 per ounce at 0735 GMT. Prices fell to $1,307.51 earlier in the session,
their lowest since March 1.
    U.S. gold futures  GCcv1  for April delivery dropped 0.2 percent to $1,309.40 per ounce.
    "I think the overall economic recovery is good enough for the (U.S.) central bank to consider a faster pace of
normalization of monetary policies," said Mark To, head of research at Hong Kong's Wing Fung Financial Group.
    A two-day Federal Open Market Committee (FOMC) meeting begins on Tuesday, with the U.S. central bank expected to hike
interest rates for the first time this year.     
    "It is somehow expected and is already priced in the market so I stick to my prediction that precious metals, with gold
included, are going to have range-bound trading, unless something really surprising happens," said To.
    With a 25 basis point rate hike seen as a done deal, one key focus is on whether Fed policy makers forecast four rate hikes
this year instead of the three they had projected at December meeting.
    Gold is highly sensitive to rising U.S. interest rates,becoming less attractive to investors as it does not bear
    The dollar inched higher against a basket of major peers on Monday as traders braced for the Fed meeting and as the
increased threat of trade protectionism kept markets on edge. USD/ 
    The dollar index  .DXY  was up 0.1 percent at 90.302. On Friday, it hit a two-week high near 90.38, following strong U.S.
economic data.*:nL1N1QX1PK
    "Potential market headwinds from the underlying(susceptibility) to risk-appetite, heightened (geo) political
tensions, inflation concerns, Russia tensions, to name a few,could help keep the floor on gold prices in check," Stephen
Innes, APAC trading head at OANDA, said in a note.    
    Gold speculators cut their net long position by 16,153 contracts to 145,659 contracts, according to the U.S. Commodity
Futures Trading Commission (CFTC) data. This was the smallest net long position since early January.
    Among other precious metals, silver  XAG=  was down 0.3 percent at $16.26 per ounce and palladium  XPD=  inched 0.1
percent lower to $993.90 per ounce.
    Platinum  XPT=  was 0.5 percent lower at $938.49 per ounce after falling to its lowest since Jan. 3 at $936.50.

Edited by SHMET

ArcelorMittal offers to sell plants in swoop for Ilva

Date Mar 16 2018 14:57:53 Source:SHMET

   BRUSSELS, March 15 (Reuters) - ArcelorMittal  MT.AS , the world's largest steelmaker, has offered to sell plants across Europe in an effort to address EU antitrust concerns over its 1.8 billion euro ($2.2 billion) bid for Italian peer Ilva.

    The offer of concessions was submitted on Thursday. No details were provided, in line with the European Commission's policy.

    While declining to provide further details, ArcelorMittal said it hoped the concessions would allay the EU competition enforcer's worries.

    "We understand this remedy package will now be subject to market testing. We hope for a swift conclusion," ArcelorMittal said.

    The company has offered to sell facilities across Europe, a person familiar with the matter told Reuters.

    The EU antitrust watchdog is now expected to seek feedback from rivals and customers on the concessions before deciding whether to clear the deal. It will decide on the deal by May 23.

    The Commission has said the deal to acquire Europe's biggest capacity steel plant might reduce competition in some flat carbon steel products and lead to higher prices for customers in

southern Europe.

    Based in the city of Taranto in southern Italy, Ilva has been plagued by charges of corruption and environmental crimes for years.

 ($1 = 0.8091 euros)

Edited by SHMET

LME copper prices flat as dollar pares gains; set for weekly drop

Date Mar 16 2018 14:57:12 Source:SHMET

BEIJING, March 16 (Reuters) - London copper prices recovered from early losses to trade flat on Friday, with the dollar giving up some of Thursday's gains following reports of another shake-up in the White House.

    U.S. President Donald Trump has decided to remove H.R. McMaster as his national security adviser, the Washington Post reported, taking the dollar lower against the yen.

    A strong dollar makes metals more expensive for holders of other currencies and can weigh on prices. Incoming White House economic adviser Larry Kudlow on Thursday said he would like the dollar to be stronger. 

    Describing copper as the "lightning rod for global investor changes", ANZ said investors "are likely to remain cautious" ahead of next week's Federal Reserve meeting, at which the U.S. central bank is expected to raise interest rates for the first time this year.



    * LME COPPER: Three-month copper on the London Metal Exchange  CMCU3  was flat at $6,917 a tonne at 0455 GMT, after touching $6,883 earlier in the session. It is on course for a 0.6-percent weekly drop.

    * SHFE COPPER: The most-traded May copper contract on the Shanghai Futures Exchange  SCFcv1  was down 1 percent at 51,870 yuan ($8,198.33) a tonne but on track for a weekly gain of 0.6 percent.

    * U.S. DOLLAR: The dollar index versus a group of six major currencies slipped 0.1 percent to 90.074  .DXY  after climbing 0.5 percent the previous day.

    * NICKEL: Nickel  SNIcv1  was the biggest loser among Shanghai base metals, slipping 1.3 percent to 102,740 yuan a tonne but still up 1.9 percent for the week.

    * COPPER: The Democratic Republic of Congo is considering adding copper to its list of strategic minerals in a move that would extract higher fees from mining companies, an adviser to the prime minister said on Thursday. 

    * TARIFFS: U.S. Commerce Secretary Wilbur Ross and European Trade Commissioner Cecilia Malmstrom have agreed to meet next week in an attempt to resolve a deepening dispute over trade tariffs, a European Commission source said on Thursday.


    * Asian stocks slid on Friday as the reports of more chaos in the Trump administration tested investors' nerves, already frayed by fears that U.S. tariffs could hurt the global economy and trigger a trade war.    

Edited by SHMET