Seaborne iron ore prices strengthen as futures and physical market activity grows
Seaborne iron ore prices edged higher on Wednesday June 4 amid increased trading of mid-grade fines in both the primary and secondary markets. Sources told Fastmarkets about this trend.
Key drivers for seaborne iron ore prices
The most-traded September iron ore futures contract on the Dalian Commodity Exchange (DCE) fluctuated over the day. It closed at 704.50 yuan ($98) per tonne, up by 1.3% from the previous closing price of 695.50 yuan per tonne.
By 6:14pm, the most-traded July contract on the Singapore Exchange (SGX) was $95.65 per tonne. This was up by $1.35 per tonne compared with the previous settlement price of $94.30 per tonne.
Some market participants said the iron ore derivatives market slightly rebounded on Wednesday. This was mainly because the continuous decline came to an end, without further downside movement drivers.
"It's a technical rebound in the derivatives market after days of decline. But overall fundamental structure for iron ore has stayed largely stable," one Beijing-based mill source told Fastmarkets.
Some sources said that iron ore stocks at major Chinese ports have declined for four consecutive weeks as of Friday May 30. They reached around 145 million tonnes. This partially eased market concerns on iron ore oversupply.
"But iron ore shipments from major miners remained robust, especially for a few Australia miners with the financial year ending in June 2025," a second Beijing-based mill source said.
A few sources noted that trading of major steel products in the physical market increased on Wednesday due to previous price declines. This partially supported the positive sentiment in the iron ore and steel derivatives market.
Seaborne iron ore prices buoyed by premium trades and inventory trends
In the seaborne iron ore market, a few late June-loaded 62% Fe Pilbara Blend fines were traded at June average 62% Fe iron ore fines index. They had a small premium in the secondary market. Meanwhile, only July-loaded 61% Fe Pilbara Blend fines are being offered and traded since mid-May in the primary market.
"Now it's on a transition period from 62% Fe to 61% Fe Pilbara Blend fines. Sources are trying to figure out and settle the price gap between them," a Shanghai-based trader said. "The prices [of 61% Pilbara Blend fines in the seaborne market] could only be stabilized when the early July-loaded cargoes arrived at China's portside market."
The same source added that mills are treating 61% Fe Pilbara Blend fines as a new iron ore brand. They can have a clear price settlement scheme after it is put into sintering production process with other mid-grade fines.
A cargo of 170,000 tonnes of 62% Fe Pilbara Blend fines was traded between traders. The deal was made at June average of a 62% Fe iron ore fines index. It included a premium of $0.20 per tonne, laycan June 19-28. Several sources told Fastmarkets about this on Wednesday.
"Speculative buying interest for 62% Fe Pilbara Blend fines increased due to their limited supply in the market in the short term," a mill source from South China said.
Buying interest for high-silica Brazilian fines remained good due to their decent cost-effectiveness and reselling margins at China's portside market. This led to a narrowed discount over a 62% Fe iron ore fines index.
"Most steel mills still prefer low-grade iron ore. They have reduced the consumption of high-grade iron ore with a high price," a second Shanghai-based trader told Fastmarkets. "This makes it difficult for traders to take high-grade ore in the seaborne market. They aim to get reselling margins."
The seaborne iron ore lump premium also inched higher following the rebound in the iron ore fines sector.
