Asian iron ore hits 30-month high of $95.05/dmt CFR China; stronger steel supports

The seaborne iron ore market hit its highest level for 30 months as a hike in steel prices ushered in more demand for feedstock and pushed up a spate of spot deals.

S&P Global Platts assessed the 62%-Fe Iron Ore Index at $95.05/dry mt CFR North China Tuesday, up $1.30/dmt from Monday. The previous high was $95.50/dmt CFR North China August 7, 2014.

The front-month March IODEX swap was up $1.80/dmt over the same period to $91.15/dmt.

"I hear steel trading has been really hot, with strong demand from end-users for finished steel products," said a Singapore trader, adding that widening steel margins would continue to support iron ore prices in the near term.

Concurring that stronger steel margins were paving the way for more restocking, a mill source in central China said many steel enterprises were producing at almost full capacity. The mill source added that mills were were making an average of Yuan 400 ($58) for every metric ton of steel produced while some were making Yuan 1,000 for some products such as hot roll coil.

"Chinese steelmakers have usually laid idle their furnaces for overhaul around this period in previous years when demand was tepid, but now many have postponed their overhaul plan and produce at full capacity," said the mill source.

The physical price of Tangshan steel square billet was up Yuan 100/mt on the day at Yuan 3,330 mt ($484.08/mt) ex-stock Tangshan Friday.

Bullish sentiment also extended to the derivatives market Tuesday.

Iron ore futures traded on the Dalian Commodity Exchange continued to rise Tuesday, with the most liquid May contract last trading at Yuan 732/dmt ($106.41/dmt), up Yuan 18/dmt on the day, and settling at Yuan 727.50/dmt, up Yuan 22.50/dmt over the same period.

Steel rebar futures also increased, with the most actively traded May contract in Shanghai Futures Exchange last trading at Yuan 3,575/mt ($519.70/dmt), up Yuan 29/mt on day, and settling at Yuan 3,589/mt, up Yuan 72/mt over the same period.