Mixed signals from two commodity markets key to Australia’s strong trade account and the earnings of some of the country’s major miners.
Iron ore is staying higher than many analysts had predicted while thermal coal prices continue their slump back to levels not seen for three years.
Iron ore prices hit 8-month highs in Singapore on Monday as strong buying continued but Newcastle priced thermal coal maintained its slow decline.
The current month prices touched $US128.75 a tonne for 62% Fe fines. That was up from $US126.54 last Friday.
Monday’s close is the highest since early June when the price traded above $US130 a tonne.
Strong buying out of China was reported where the Dalian Commodity Exchange (DCE) has again issued a government-inspired warning cautioning about trading at times of volatile (ie rising) prices.
“Given the recent uncertainties in the market, the price fluctuation of iron ore is rising. Please be advised of rational participation, trading compliance, and strengthening risk management, so as to ensure stable operation of the futures market. DCE will continue strengthening daily market surveillance, investigating and dealing with all kinds of violations, and maintaining market order.”
That’s a clear sign that the pressures in the iron ore market are stretching official Chinese patience. The DCE is mostly a domestic market so most of the “price fluctuations’ are due to local traders, not foreign companies.
The MySteel website reported that, “The upward momentum seen last week in Chinese prices for imported iron ore for both port stocks and seaborne cargoes remained firm on February 20, and portside trading also picked up.”
Including the VAT of 13%, Australian iron ore was trading around $US145 a tonne (or just under $US130 a tonne without the value added tax).
Australian coking coal prices though retreated from $US389 on Friday to around $US330 a tonne on Monday.
And Newcastle thermal coal saw another fall – down to under $US180 a tonne for the March contract and a fall of more than 9% in the past six days and over $US200 a tonne from the peak last June.
After last week’s 11% fall, the February contract ended at $US205.65. The front month price has more than halved since last November.
