Iron Ore Market in Brief: Range-bound fines prices, rise in premium lump
Physical iron ore fines prices were rangebound on Friday September 27 whereas the lump premium was traded at higher rates.
Commodity | Price | Difference / MT |
MB 62% FE IRON ORE FINES INDEX | USD 90.85 per ton CFR Qingdao | -0.06 USD |
MB 62% FE PILBARA BLEND FINES INDEX | USD 91.24 per ton CFR Qingdao | -0.06 USD |
MB 62% FE IRON ORE INDEX-LOW ALUMINA | USD 90.46 per ton CFR Qingdao | +1.01 USD |
MB 58% FE PREMIUM INDEX | USD 81.12 per ton CFR Qingdao | +1.07 USD |
MB 65% FE IRON ORE INDEX | USD 98.10 per ton CFR Qingdao | +0.40 USD |
MB 62% FE CHINA PORT PRICE INDEX | 731 Yuan per wet metric ton | -2 Yuan |
MARKET DRIVERS
China’s iron ore futures strengthened during the day while steel futures weakened. Because of the futures rise, iron ore buying interest was heard to be “not bad” during the day with some steelmakers in China doing a “last round” of restocking before the National Day holiday week,
which will start next Tuesday.
In terms of prices, iron ore fines were under some pressure amid the continuing restrictions on sintering and pelletizing in some northern Chinese cities, while lumps and pellets, which are direct-charge materials, were supported by more demand, according to sources.
A seaborne cargo of Pilbara Blend lump traded at a higher lump premium during the day. Iron ore fines indices were mixed for the day, while the lump premium index rose.
PORT PRICES
Pilbara Blend fines traded at 725-745 yuan per MT in Shandong province and Tangshan city on Friday, according to sources. The latest range was equivalent to USD94.10-96.90 per MT CFR China in the seaborne market.
Brazilian miner Vale will supply a new pellet feed product called Ground IOCJ - Ground Iron Ore Carajas - from the first quarter of 2020 amid expectations of an increase in its supply of regular IOCJ fines and growing demand from Chinese mills for pellet feed.
Demand for such products are being driven by stricter environmental controls in China and the construction of bigger blast furnaces that require an optimized burden mix, its executive director of ferrous minerals, Marcello Spinelli, said at the 19th China International Steel & Raw Materials Conference in Qingdao, China
on Thursday September 26. The miner anticipates pellet feed ratios in Chinese blast furnaces to increase from around 14% last year, to around 19% by 2025.
No major sales were completed in the Commonwealth of Independent States’ pig iron export market during the week to Thursday September 26, although market levels went down on free falling scrap prices and a general pessimistic mood.
Weekly price assessment for high-manganese pig iron, export, FOB main port Black Sea, CIS declined to USD290-295 per MT on Thursday September 26 from USD295-305 per MT a week earlier.
“CIS mills say they do not want to go down below the breakeven point and everybody is waiting for anything from the United States [the largest outlet, where no spot sales have been heard in over a month],” one trader said.
Market sources estimated that CIS suppliers’ workable level would be USD300-305 per MT FOB Black Sea, but estimations on buyers’ price ideas were, “far below USD300 [per MT FOB]” - around USD270-275 per MT FOB Black Sea - and lower in weak scrap markets.
“No one is talking about some exact [price] now; mills have firm offers while buyers aren’t giving any serious bids because the market is too fragile and uncertain and the opposition between suppliers and buyers is too long,” another trader said.
Although, no CIS suppliers have been heard to discuss sales at such a low level as USD270-275 per MT yet. “I have talked to one CIS supplier and they believe they can wait longer than consumers and would like to try to hold until prices go higher,” one buyer said. “It will be a case of who can wait longer.”
“CIS suppliers can stock some pig iron tonnages in ports, some of them can make stocks at mills sites,” another trader said. “But stocks cost money - it’s frozen working capital.” “Suppliers can also switch blast furnaces to hot conversion; it is cheaper than to heat a blast furnace up after the stoppage,” the trader added.
Several source estimated that if some deals were being done at the moment, they would be at round USD290-295 per MT FOB Black Sea. “We are not interested in spot pig-iron purchases because scrap
[the substitute for pig iron] is in freefall and coming close to a three-year low,” one buyer in Italy said. “Decreasing final steel product prices are also an issue.”
Weekly price assessment for pig iron, import, CFR Italy was USD315-320 per MT on September 26, narrowing downward from USD315-320 per MT a week before. No exact offers from CIS mills were heard in Italy, while buy-side sources reported that pig iron was available to them at USD315-325 per MT CFR or USD290-300 per MT FOB.
Assessment of the price for hot-briquetted iron, CFR Italian ports was unchanged at USD250 per MT on the same day due to no market activity being reported. “The issue is that HBI is not obligatory [in steel melting] it’s just replacing good scrap,” another trader said. “According to the low scrap price level, buyers would need to buy HBI at USD200 [per MT CFR in Italy], but no one is selling at this price.”
“As long as good scrap is available in big quantities than the main users will avoid buying HBI on spot, only long-term contracts are completed,” the same trader added.
Report By: Javad Najafi
