Iron ore spot prices are up again, close to a multi-year record on weather disruptions in China and Australia.
According to Business Insider, benchmark 62% fines rose by 1.4% to $89.89, while 65% fines were up by 1.4% as well to $102.40.
Lower grade 58% fines remarkably scaled fresh heights to $75.07, a jump of 1.6%.
BHP shaves iron ore production estimates
On Tuesday, BHP Group Ltd [ASX:BHP] announced that after cyclone Veronica interrupted its operations last week, its iron ore production estimates would be reduced by six–eight million tonnes.
While this pales in comparison to the 75 million tonnes that Brazil’s largest miner, Vale SA, wiped off its estimates, the BHP production cut is still significant.
It could also add further to prices going forward.
BHP’s share price largely shrugged off the news yesterday, down only marginally by 0.05%.
Chinese weather leads to further iron ore production curbs
Meanwhile, weather in China is also having an impact on iron ore prices, with production curbs once again reinstated at steel mills in Tangshan and Handan.
Both located in Hebei province, these are two of the biggest steelmaking cities in the country.
For reference, here’s the outlook of air quality in Tangshan province:
Air quality improves on Monday, but Tuesday it gets worse so the current production curbs could be extended.
Finally, here’s a quick look at the May 2019 Dalian Commodity Exchange iron ore futures contract:
As the most traded iron ore futures contract, it is thought to be a leading indicator of where iron ore prices may go in the future.
In late trade, it rose as much as 4% to $98.86 a tonne (664 yuan), the highest amount on record since China set up iron ore futures in 2013.
As a result of all these factors, prices could well remain buoyant for a sustained period of time.
For Money Morning
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