Global iron ore prices fell sharply again on Friday, pushing prices into correction territory which is a fall of 10% or more from their most recent peak on May 12.
Prices for the three ore types – 62%, 58% and 62% fines – closed Friday down between 12% to more than 16% from their all-time highs on May 12.
Continuing fears about Chinese policy towards speculative trading in commodities and crypto currencies last week shook markets and sent prices lower.
Two major statements last week, culminating in an outright attack on the dangers of bitcoin and other crypto currencies on Friday saw prices of key commodities important to China – like copper and iron ore – fall sharply for the third day in a week.
While prices were lower by the close on Friday from the preceding Friday – the falls were small – $US9 to $US11 a tonne – compared to the much larger falls from those mid-month highs.
The price of 62% Fe fines delivered to northern China closed at a still very high $US200.72 a tonne on Friday. That was down $US11.13 over the week, but a large $US36.85, or 15.5%, from the record peak of $US237.57.
58% Fe fines ended at $US172.75, down $US8.06 a tonne on the previous week, but off 16.6% from the peak on May 12 (or $US34.47).
65% Fe fines from Brazil dipped $US9.40 a tonne over the week to Friday to close at $US235.70. But Friday’s close was down $US32.10 or 12% from the record on may 12 of $US267.80 a tonne.
Not helping sentiment was news that China will now spend (waste) tens of billions of dollars importing low quality, high-cost iron ore from Mongolia, Russia and other countries, as well as trying to get its fading domestic industry to lift its game.
This does mean however, more volatility and uncertainty for prices and the big three producers – BHP, Rio Tinto and Fortescue.
Share prices of major iron ore players all fell on Friday and last week.
Rio Tinto shares dipped 0.9% on Friday, taking the week’s loss to 2.6%. BHP shares fell 1.1% on Friday and 3.6% for the week and shares in Fortescue Metals lost 2.2% on Friday and that generated the 2.1% loss for the week.
In Brazil, shares of Vale fell 1.5% on Friday and lost 1% in the week, despite it being in the box seat to supply China because of its 65% Fe fines product being preferred increasingly by Chinese steel mills.
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Copper prices ended lower on Friday with the market still feeling the fallout from the strong warning from China that it was cracking down on price manipulation in commodities.
The warning on Wednesday hit copper, zinc, lead, nickel, iron ore and cryptocurrencies and despite a pause on Thursday after Wednesday’s shake out, prices slumped again on Friday.
A more direct warning against bitcoin and its mining emerged on Friday which saw the price of the main cryptocurrency slump further in late trading.
London Metal Exchange base metals prices sold off in end-of-week trading on Friday, with copper, nickel and aluminium closing at their lowest levels since April.
Three-month copper closed at $US9,881.50 a tonne at 5pm, down $US166.50 (1.7%) on the day and down 3.6% from the previous Friday’s close of $US10.240 a tonne.
Copper’s all-time peak was hit on Monday May 10 at $US10,747.50 a tonne, 8% above Friday’s sub-$US10,000 tonne close.
Importantly, the key industrial metal finished the week below the symbolic $US10,000 per tonne, as the recent price surge has drawn more metal into global markets.
Sentiment wasn’t helped with details of the sharp fall in China’s copper imports in April.
Data from the China’s Customs Administration showed that China’s April copper imports in April fell from March, as a rally in prices for the metal to the highest levels in a decade made purchases less appealing for Chinese end users.
Imports of unwrought copper and products totalled 484,890 tonnes last month, the General Administration of Customs said. That was down 12.2% from 552,317 tonnes in March and up 5.1% from Covid-hit April 2020.
Copper ore and concentrate imports in April totalled 1.92 million tonnes, down by 11.5% month on month, down by 4.8% year on year. Refined copper April totalled 319,135 tonnes, down by 10.1% month on month, up by 10.9% year on year Copper scrap April total: 167,767 tonnes, down by 2.5% month on month.
Meanwhile China’s copper imports in April fell from March, as a rally in prices for the metal to the highest levels in a decade made purchases less appealing for Chinese end users. Prices hit an all-time high on Friday (see above).
Imports sank to a 13-month low in February after rough sea conditions restricted imports from Chile at the start of the year but they rebounded by almost 35% in March as the situation improved.
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Spot gold ended the week at a settlement of $US1,876.70, up 2.1% for the week, The metal rose $US5.20 on Friday or 0.3%.
July West Texas Intermediate crude moved higher on Friday, as did Brent futures, but still shed value over the week.
Front month Brent futures settled at $US66.44 on Friday.
WTI rose 2.7% on Friday to settle at $US63.58.
That was a fall of 2.7% for the week and came as the number of rigs drilling for oil in the US again rose over the week.
The weekly Baker Hughes drill rig numbers showed a rise of 4 to 356 in the total number of oil rigs in use in the US.
Total rig numbers rose 2 to 455 as two gas rigs stopped working.
