Iron ore gains as BHP output strong

Seaborne  iron ore prices surged on Wednesday on the back of mill restocking and a  buoyant steel market. BHP meanwhile saw strong on-year output growth  despite some maintenance activity.

The Kallanish KORE  62% Fe index for Australian fines gained $0.53/tonne to $71.49/dry  metric ton cfr Qingdao, the highest level since early March. On the  Dalian Commodity Exchange January 2019 iron ore settled at CNY 514/t  ($74.29/t), up CNY 4/t, while on the Singapore Exchange November 62% Fe  futures surged $2.66/t to settle at $72.52/t.

BHP  meanwhile reported a 10% year-on-year increase in its iron ore output  in its first financial quarter (July-September). At 61 million tonnes,  output during the quarter was still down -3% from the previous quarter  however due to maintenance to improve the reliability of operations at  its port facilities. On a 100% basis output at BHPs mines was up 8%  y-o-y to 69mt, but down -4% from the previous quarter.

Strong  output was anchored by a ramp up at BHP’s Jimblebar mine. BHP claims  85% of the mine output, which in the September quarter meant 16.22mt,  160% higher than a year earlier and up 9% from the July quarter. Yandi  meanwhile saw BHPs 85% interest account for 16.87mt, up 16% y-o-y but  down -3% quarter-on-quarter. BHP still expects to produce 241-250mt of  iron ore in the year ending June 2019, or 273-283mt on a 100% basis.