Commodity Market Report
Iron ore markets short-term outlook May 2021
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Report summary
Another month, another record price for iron ore! The benchmark 62% fines index hit a new all time high of $235/t CFR on May 12th and the monthly average came in at an astonishing $207/t CFR. The market for high grade iron ore and direct charge feed remains super hot as steel mills maintain the focus on maximising productivity, despite margin compression in the second half of May. We still think iron ore prices will be lower in H2 than H1, but the market remains vulnerable to any supply disruption. Read our monthly update for the latest analysis on short term supply/demand dynamics and price outlook.
Table of contents
- A new all time high
- Technical indicators – Iron ore prices retreat from record high as China increases measures to cooldown the market
- Chinese demand hits new highs
- China’s rising iron ore import bill
- Indian demand takes a hit
- Brazil
- Australian exports – muted
- Chinese ore production remains high
- Indian ore supply remains resilient
- Inventories – Chinese p orts’ iron ore inventories declined over last month indicating strength in demand
- Freight – Capesize segment mid-month’s retreat but fundamentals remain strong
Tables and charts
This report includes the following images and tables:
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Key quarterly forecast (please note - all price forecasts will be revised with publication of the Q2-2021 Long Term Outlook in June).Iron ore price: monthly averageIron ore price and hot metal spread
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62% Fe - Fibonacci Retracement Levels62% Fe Forward CurvesChina’s steel production boom .. continued through May according to CISA.China’s import dependency for iron ore is estimated 80% today.The cost of imported iron ore has ballooned over the past five years.Brazilian exports have increased by 13.5 million tonnes year-on-year, but shipments from northern Brazil have underperformed with Sao Luis share falling from 56% to 51%.Seaborne supply from Sao Luis (Carajas fines) is a key driver of high grade price premiums: chart shows relationship between exports from Sao Luis and the 62-65% Fe spread.Chinese domestic ore production reached its highest level of this year due to high iron ore prices and strong demand.
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