Iron Ore Market in Brief: Seaborne prices retreat, market mulls ceiling for lump premium
Seaborne iron ore prices were down on Wednesday July 3, even as futures on the Dalian Commodity Exchange closed higher after hitting a five-year peak a day earlier.
Commodity | Price | Difference / MT |
MB 62% FE IRON ORE INDEX | USD 124.75 per ton CFR Qingdao | +1.02 USD |
MB 62% FE IRON ORE INDEX-LOW ALUMINA | USD 125.83 per ton CFR Qingdao | +0.41 USD |
MB 58% FE PREMIUM INDEX | USD 114.86 per ton CFR Qingdao | +0.18 USD |
MB 65% FE IRON ORE INDEX | USD 132.6 per ton CFR Qingdao | +0.5 USD |
MB 62% FE CHINA PORT PRICE INDEX | 908 Yuan per wet metric ton | +1 Yuan |
KEY DRIVERS
Brazil’s iron ore exports volume were down 16.7% year on year to 29.4 million tons last month, although on a month-on-month basis the drop amounted to only 0.4 million tons, data from the country’s ministry of economy published this week showed. Tight seaborne supply, amid disruptions in Brazil and Australia, has been the principal driver of seaborne iron ore prices this year. Meanwhile, lump premiums moved up further this week, with a cargo of Newman Blended Lump commanding a premium of USD0.42 per ton over the August average of a 62% index on a fob basis.
Last month, another lump cargo had fetched a premium of USD 0.40 per ton over the July average of a 62% index. One market participant said that steel mills had been operating with a low proportion of lump in their blast furnace burden and therefore despite the rising premiums for the material, they were not incentivized to further change their lump usage.
Sintering and pelletizing restrictions in parts of China could also be facilitating lump demand as buyers look for direct-charge material for their blast furnace operations, another source added. Both sources said that there was limited upside for seaborne lump premiums as their prices at the port were more competitive. Daily MB 62% Fe Iron Ore Index fell by USD 1.02 per ton, while the daily MB 65% Fe Iron Ore Index fell by USD 0.50 per ton.
QUOTE OF THE DAY
“The recent surge in iron ore prices was mainly driven by supply tightness but with steel product prices not performing well, the current high prices for iron ore cargoes are unlikely to be unstainable in the long run,” a Singapore-based broker said.
Report By: Mohammadreza Barakchian
