Iron ore prices hit their highest in 10 years during the week ended April 23 amid improved market sentiment for demand of the bulk commodity and loosening of emissions control measures in China’s major steel-producing hub Tangshan.
S&P Global Platts' CFR North China price for iron ore fines grading 62% iron rose 4.1% throughout the week to $185.1 per tonne as market sentiment for demand was lifted by high steel production and firm downstream demand in China. Seaborne iron ore prices on April 20 hit their highest in 10 years to $187.75/t amid "concentrated demand for mainstream medium to high-grade fines from Chinese buyers," Platts said in a same-day note.
In an April 23 report, Platts noted that emissions control measures in major steel producing hub Tangshan had eased slightly in mid-April. While such environmental control measures are expected to spread toward southern provinces such as Jiangsu, strong downstream demand and high steel production lifted market sentiment for domestic iron ore demand.
In a two-day summit on climate change attended by world leaders, U.S. President Joe Biden announced the country’s pledge to cut greenhouse gas emissions by 50% to 52% from 2005 levels by 2030 as part of the U.S.' renewed commitment to the Paris Agreement on climate change while leaders of other countries reaffirmed and raised their climate commitments.
On April 16, China reported a record year-over-year growth of 18.3% in its first-quarter GDP as the economic recovery from the slump led by COVID-19 pandemic picked up pace, Reuters reported, noting that it was the fastest monthly pace since 1992 when quarterly records began in the country.
Price ring
The price of copper increased by 2.2% from a week earlier to $9,545.5/t. SP Angel said in an April 22 report that "strong demand and seasonal drawdowns in copper look likely to support prices at high levels" and expects "the copper market should return to trading more on fundamentals than on speculation over the next few months."
Zinc fell 1.8% to $2,802.5/t. ING Bank’s analysts wrote in an April 22 report that the “sudden jump” in Chinese imports last month would "help offset worries over expected production cuts for the refined metal in the domestic market. However, for now, treatment charges for zinc continue to hover at multi-year lows." Chinese customs data showed imports of zinc ore rose 34% on a monthly basis to 361,000 tonnes last month, ING Bank’s analysts noted.
Lead edged down 0.6% to $2,021/t, and nickel dropped 1.6% on a weekly basis to $16,150/t.
Gold was 0.1% down at $1,778.4 per ounce while silver was flat at $26.05/oz. SP Angel noted April 23 that gold was near its eight-week high amid a recovery in the physical market, supported by strong imports from India and China.
SP Angel said that palladium prices on April 21 surged to a record high on positive demand from automakers and deepening supply shortfalls as well as supply worries at top producer Public Joint Stock Company Mining and Metallurgical Company Norilsk Nickel's Oktyabrsky project after operations were suspended due to flooding.
Aluminum gained 2.8% week-over-week to $2,373.5/t.
Talking points
In an April 15 report by S&P Global Market Intelligence’s Metals and Mining Research team, analysts upgraded the average annual three-month copper price forecast to $8,338/t, representing a 35% increase year over year.
Market Intelligence analysts said infrastructure investment in the U.S. and China, as well as growth from electric vehicles and energy transition over the medium to long term, will support global copper demand, forecasting a 189,000-tonne market deficit with higher global demand for this year.
Analysts noted the positive sentiment arising from Biden’s infrastructure plans helped buoy the U.S. dollar but conversely weighed on copper prices in March. "The direct impact from the U.S. infrastructure boost is likely to take some time to filter through to copper demand, however — most likely post-2021 — while its exact form remains to be confirmed by Congress," analysts wrote in the report.
Financings
Bain Capital Credit (australia) Pty. Ltd., Oaktree Capital Group LLC and White Oak Global Advisors LLC are reportedly negotiating to refinance at least A$430 million of GFG Alliance Ltd.'s loans linked to its Australian mining and steel assets, including the Middleback Ranges facility in South Australia.
Meanwhile, New York-based private equity firm American Industrial Partners purchased most of GFG Alliance Ltd.'s senior debt linked to the Dunkirk smelter in France and the Duffel rolling mill in Belgium as the latter is seeking alternative long-term funding after the collapse of major lender Greensill Capital (UK) Ltd. in March.
Tata Steel Ltd. unit Tata Steel UK Ltd reportedly filed a complaint against GFG Alliance Ltd.'s LIBERTY Steel Group before a U.K. court for missing a payment to complete the £100 million total consideration for the specialty steel product plant Liberty Steel acquired in 2017.
Franco-Nevada Corp. agreed to pay US$538 million to acquire 14.7% of Vale SA's outstanding participating debentures from Banco Nacional de Desenvolvimento Econômico e Social and the Brazilian government, a deal that will give Franco-Nevada royalty exposure to Vale's iron ore operations.
India's Hindustan Copper Ltd. closed a private placement to institutional buyers on April 12 comprising shares worth 5 billion rupees.
S&P Global Platts and S&P Global Market Intelligence are owned by S&P Global Inc.
