LAUNCESTON, Australia, May 11 (Reuters) – There is an increasing disconnect between the two key ingredients for making steel, with iron ore safely within China’s economic bubble and coking coal more exposed to the rest of the coronavirus-riddled world.
The main difference is that while China imports the bulk of the iron ore with which it feeds its 1 billion-tonne-a-year steel industry, it has a large domestic coking coal industry and imports only about 10% of its needs.
Benchmark spot 62% iron ore for delivery to China MT-IO-QIN62=ARG, as assessed by commodity price reporting agency Argus, ended last week at $88.30 a tonne.
While this was down 8% from its peak so far this year at $96 a tonne on Jan. 17, iron ore’s decline looks modest compared to the massive losses for other commodities, with both crude oil and liquefied natural gas at one point down more than 70% from their early 2020 peaks.
Iron ore is also outperforming coking coal futures on the Singapore Exchange, where valuations for the Australian free-on-board price, ending at $115 a tonne on May 8.
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