Commodity Market Report

Global iron ore short-term outlook May 2018

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31 May 2018

Global iron ore short-term outlook May 2018

Report summary

The 62% Fe benchmark fines price was uncharacteristically stable month-on-month in May. Iron ore pricing spreads also remained consistent – and constantly wide. The upcoming Shanghai Cooperation Organisation summit in June could introduce some familiar volatility to prices, but any effect will be short-lived and we do not expect prices to stray far from US$65/tonne. With 62% Fe prices remaining range bound, price spreads will be the key to determining which sources of supply will exit the market – this must happen before prices can make a decisive break from current levels. The process has begun but has further to run.

Table of contents

  • Executive summary
    • Chinese hot metal output picks up in May
    • Scrap: beginning to lose its shine
    • Supply: tighter at the top!
    • How will the Shanghai Cooperation Organisation summit affect prices?
    • So where next for iron ore prices?
      • Key quarterly forecast
      • Capesize spot freight rates, US$/wmt, to China (Beilun/Baoshan)
    • Quarterly iron ore production - selected companies (Mt, 100% basis)
    • Quarterly indicators: iron ore trade, crude steel and hot metal production (Mt)

Tables and charts

This report includes 21 images and tables including:

  • Key forecast data
  • Iron ore inventory at Chinese ports, by source
  • Utilisation rate at Chinese iron ore mines
  • Trade of iron ore, monthly volume
  • Trade of iron ore, monthly y/y change
  • Steel production, monthly y/y growth
  • BF utilisation rate in Tangshan, China
  • Global hot metal output exceeded the five-year average in April
  • We expect Chinese output to be robust in May, which should provide a further boost.
  • Rising crude steel utilisation rates, particularly in China...
  • ...are supporting steel mill margins and ultimately demand for iron ore.
  • Year-to-May exports suggest premium iron ore supply is stagnating
  • Iron ore prices and spreads
  • Pellet premia - on the up!
  • Key companies: Table 1
  • Quarterly mine production
  • Q1-18 year-on-year production change
  • Supply-demand balances: Table 1
  • Forecast data: iron ore trade and hot metal production (Mt)
  • Prices: Table 1
  • Prices: Table 2

What's included

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