Iron ore prices have increased by almost $5/mt since late last week and have exceeded $135/mt CFR amid the recent supportive monetary policy measures together with some improvement in the demand-supply balance ahead of the Lunar New Year holiday.
Iron ore fines with 62 percent of Fe have reached $136/mt CFR, up by $3.3/mt from yesterday and up $4.9/mt since Friday. At the same time, Brazilian 65 percent Fe fines have settled at $148.25/mt CFR, increasing by $3.45/mt from yesterday. Today, 11 deals for a total of 270,000 mt of import iron ore have been concluded at the Corex platform, including 90,000 mt and 80,000 mt of 60.5 percent Jimblebar blended fines transacted at the March 62 percent index -$2.8/mt, for shipment during February 25-March 5. Over the past few days, trading has improved a little, with more blast furnaces resuming operations after maintenance works and with some decline in supply from Australia. However, a few market sources mentioned that the pre-holiday restocking is much slower this year as the profitability of mills is still squeezed.
The main support for iron ore prices is coming from sentiment. Today, the People Bank of China has officially announced that the reserve requirement ratio (RRR) will be cut by 0.5 percentage points on February 5, a move awaited since last week. This will release RMB 1 trillion ($139 billion) in long-term liquidity to the market. “As stated in the past, it will be a slower market [for steel in China] with cost pressure and [monetary] policy will be one of the most powerful factors and today this is the situation,” a Chinese trader said.