Commodity Market Report

Iron ore markets short-term outlook May 2021

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01 June 2021

Iron ore markets short-term outlook May 2021

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 20 images and tables including:

  • 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 average
  • Iron ore price and hot metal spread
  • 62% Fe - Fibonacci Retracement Levels
  • 62% Fe Forward Curves
  • China’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.
  • March peak: Seaborne iron ore prices dropped sharply due to Tangshan's curbing output policy, but the domestic prices reacted slowly.
  • Indian ore supply - recovering from last year's lows.
  • Plentiful supply and high seaborne price, suggests upside risk to Indian exports.
  • Chinese iron ore port inventories - seasonally
  • Chinese iron ore port inventories and offtake
  • Monthly Brazil – China freight rates
  • Monthly West Australia – China freight rates
  • Quarterly indicators: iron ore trade, crude steel and hot metal production (Mt) (please note: all forecasts will be revised with publication of the Q2-2021 Long Term Outlook in June).

What's included

This report contains:

  • Document

    Iron ore markets short-term outlook May 2021

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