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Today is probably the clean-out push that iron ore and steel prices needed. Iron ore swaps for April traded as low as $127.50/t earlier in Asia, before bouncing back towards $128-130/t. Fundamentally, we believe that this price range offers significant value for mills, relative to our forecast Chinese pig iron production rates across April-May. However, the renewal of last year’s Q3:12 ?buyers strike? may see the iron ore market fall below these price levels, before stabilising. While we place the top of the Chinese cost curve for iron ore in the $125-130/t range, this offers zero protection for miners in a de-stock scenario.
For physical iron ore markets, the TSI Fe 62% China index fell $4.40/t (3.1%) to $149/t (MTD: $145.50/t. The Platts Fe 62% index plummeted $5.75/t today to $139.37/t and the TSI Fe 58% index dropped $4.10/t to $133.30/t (MTD: $138.50/t). Metal Bulletin followed the tone of the day, recording its Fe 62% index down $5.57/t at $139.52/t, while its Fe 58% price was quoted at $127/t, off $2.38/t on the day.