Iron ore price explodes higher
The import price of 62% Fe content ore at the port of Tianjin soared nearly 5% to $61.60 per dry metric tonne on Tuesday according to data supplied by The Steel Index as top producers cut output guidance and demand from top consumer China rebounds.
That was the highest level for the Chinese benchmark price in over two months. Futures trading on the Dalian Commodities Exchange indicated further appreciation ahead with the most active contract reaching its daily up limit of 6% for a new 2016 high of 471.50 yuan or $70.10.
A note from Freight Investor Service described "massive movement" on the Dalian exchange with the rally starting last night and continuing into Tuesday as the contract broke through previous resistance levels of the highs from April and August this year.
Last week top iron ore miner Vale reduced its production outlook for 2017 to 360m–380m tonnes, below its original forecast for 380m–400m tonnes
Against most predictions, year to date the price of the steelmaking raw material is up 43.6% after surging by two-thirds in value from near-decade lows in December last year.
China, which consumes more than 70% of the world's seaborne iron ore trade, imported 93 million tonnes in September, only slightly below the record 96.3 million tonnes hit in December last year. Shipments for the first nine months are up more than 9% from 2015's record setting pace and on track to breach 1 billion tonnes for the first time.
Last week top iron ore miner Vale reduced its production outlook for 2017 to 360m–380m tonnes, below its original forecast for 380m–400m tonnes. The Rio de Janeiro-based giant said 2016 production would be at the lower end of a range of 340m–350m tonnes.
Number two producer Rio Tinto also cut its outlook for this year's shipment by as much as 5 million tonnes, hampered by logistics bottlenecks at its Pilbara operations in Western Australia. The Melbourne-based company expects to ship around 325m tonnes this year, rising slightly to between 330m – 340m tonnes in 2017.
Metallurgical coal's rise this year has been even more dramatic than that of iron ore and trading at $245.50 a tonne on Tuesday, the steelmaking raw material is up 25% so far in October. According to data provided by the Steel Index premium Australia hard coking coal prices are up more than three-fold since hitting multi-year lows around $70 a tonne in November last year.