Global iron ore prices soared in panic-like dealings on Monday, hitting new all-time highs for the third day in a row.
The rapid rise in iron ore prices has all the hallmarks of a FOMO (Fear Of Missing Out)-driven buying surge .
The surge in prices, which helped drive the ASX higher on Monday with record prices for a range of big miners including BHP and Rio Tinto, won’t work that magic on Tuesday with the slide in tech stocks on Wall Street knocking ASX futures down by 52 points in overnight trading.
While rising steel prices in China and in markets like the US, Europe and Australia are seeing steelmakers make their highest returns for a decade or more, there seems to be other factors at work in China.
The rises have been so dramatic that in the three trading sessions since China came out of its five-day Labour Day break, prices have jumped by up to 25% in gains never seen before in such a short period of time.
In fact the rises for the three main grades of ore traded – 62% Fe fines, 58% Fe fines and 65% Fe fines (from Brazil) rose by record amounts for a single day.
The Metal Bulletin’s Fastmarkets website said the index price for 62% Fe Fines delivered to northern China hit $US230.56 a tonne, up 8.6% on the day or $US18.31 a tonne. The price of this benchmark iron ore product is now up 22% since the end of April – but really since last Thursday when the holiday ended.
The price of 58% Fines (mostly from Australia and companies like Fortescue Metals – and Roy Hill which ships a 55% product and received a proportionate price) surged 9.4% or $US17.43 to top the $200 level for the first time at $US202.72 a tonne.
And the much sought after 65% Fines product from Brazil actually saw a smaller rise because its price has risen so high. It was up 8% or $US19.40 a tonne to top the $USUS260 a tonne level for the first time at $US263 a tonne.
The Financial Times and Bloomberg both attributed the rise to the global commodity price surge and recovering economic growth.
That might be so outside China, but in the world’s biggest market, blast furnace-based steelmakers are increasingly nervous about trade, tax and tariff changes that will upend the industry from the start of June onwards.
Meanwhile LME copper rose as much as 3.2% to a record $US10,747.50 a ton on Monday, before losing this gain and settling 0.3% lower at $US10,382, down from Friday’s record close of $US10.417 a tonne.
In New York Comex copper also fell, settling lower on the day at $US4.71 a pound and fell further in after-hours trading to around $US4.69 a pound. Copper had settled at a record $US4.74.85 a pound last Friday.
