Iron Ore Up Further on Weather Disruptions in China & Australia

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%.

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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%.

The share prices of Fortescue Metals Group Ltd [ASX:FMGand Rio Tinto Ltd [ASX:RIO] may well continue their stellar run.

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:

Iron Ore

Source: aqicn.org

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:

Iron Ore

Source: barchart.com

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.

Regards,

Lachlann Tierney,
For Money Morning

PS: If you want the inside scoop on 10 mining companies that could be set for a bumper year, download this free report to learn more.


Lachlann Tierney is a writer for Money Morning and has been investing for nearly a decade. With an MSc from the London School of Economics, he brings a sound understanding of global markets to his writing. Lachlann is interested in emerging technologies, energy solutions and helping people invest their money wisely. Recently, he has been working with Phil Anderson and Terence Duffy. They have three publications:

Phil Anderson’s Time Trader
Cycles, Trends & Forecasts
Money Morning Trader


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