Watch the prices of the big three Australian iron giants take off again today after prices on Friday surged to new seven-year highs.
Friday’s jump came two days after a big rise on Wednesday on fears of a looming shortage of ore in early 2021.
The question now for investors is when will the boom end after a near 12% surge last week to more than $US145 a tonne for 62% Fe fines delivered to northern China (according to MB Fastmarkets).
S&P Global Platts put the price at $US145.30 a tonne for 62% fines.
Both saw rises of more than $US7 a tonne (or more than 5.7%) on Friday as Chinese iron futures saw the price jump to more than $US148 a tonne for ore to be delivered in January 2021.
Iron ore prices are up 56% in the year to date — compared with around 24% for copper — and is 2020’s best performing commodity.
Incoming supplies remain tight, steel output continues to rise on strong infrastructure demand and prices are rising.
China’s trade data later today (Monday) will show iron ore imports topping a billion tonnes for the first time in the first 11 months of the year.
For the first 10 months of 2020, iron ore imports rose 11.2% to 975.2 million tonnes, rising 11.2% from the same period a year earlier.
Iron ore imports in October topped 106 million tonnes for the second month in a row.
But last week’s disappointing forecasts by Brazilian miner Vale for its 2020 and 2021 production has lit a fuse under iron ore prices, driving last week’s rally which was concentrated into three days from Wednesday through Friday.
Vale lowered its iron ore production guidance for 2020 to 300-305 million tonnes from 310-330 million tonnes due to the supply disruptions seen throughout the year, the company said on Wednesday. Its original forecast for 2020 was 340 – 355 million tonnes (from 302 million tonnes in 2019).
The 2021 forecast has been set at an initial 320 – 335 million tonnes which is lower than the first forecast for 2020.
“Restocking by mills has been driving demand and this has made the market very sensitive to supply developments,” commodity strategists at ING said in a note on Friday.
Imported iron ore stocked at 45 Chinese ports covered by Mysteel consultancy’s weekly survey fell for the fourth week over November 27 to December 3, down 1.6 million tonnes from a week earlier to around 124.5 million tonnes, mainly due to lower arrivals from Australia and Brazil and strong offtake by steel mills.
That saw the share prices of BHP, Rio Tinto, and Fortescue surge as well last week.
Friday saw Rio shares close up 0.9% for the day to close at $113.20 and take its gains for the week to nearly 11%. BHP rose 0.6% to end at $41.50 for a 7% rise for the week.
Fortescue Metals closed 0.2% down at $20.61 on Friday but still ended up nearly 11% for the week thanks to the huge 13.3% on Thursday.
