Iron Ore Market in Brief: Vale lowers target, seaborne prices rise, 65/62% spread widens
On Tuesday, October 22nd due to the decrease of Vale sales expectations, seaborne iron ore prices were increased. However, the spread between 65% and 62% Fe indices continued to widen.
Commodity | Price | Difference / MT |
MB 62% FE IRON ORE FINES INDEX | USD 86.68 per ton CFR Qingdao | +1.28 USD |
MB 62% FE PILBARA BLEND FINES INDEX | USD 86.33 per ton CFR Qingdao | +1.28 USD |
MB 62% FE IRON ORE INDEX-LOW ALUMINA | USD 85.27 per ton CFR Qingdao | +1.03 USD |
MB 58% FE PREMIUM INDEX | USD 76.37 per ton CFR Qingdao | +1.12 USD |
MB 65% FE IRON ORE INDEX | USD 95.00 per ton CFR Qingdao | +1.40 USD |
MB 62% FE CHINA PORT PRICE INDEX | 676 Yuan per wet metric ton | -9 Yuan |
MARKET DRIVERS
Brazilian Vale has temporarily suspended activities at its Itabiruçu tailings dam, with an iron ore output estimation of 1.2 million MT for this year. According to a Brazilian miner, he expects his iron ore and pellet sales to fall between the lower and midpoint of the unchanged guidance range of 307-332 million MT, compared with an earlier expectation around the midpoint.
Itabira is part of Vale’s Southeastern System, where the produced ore is concentrated to achieve shipping grade and part shipped to Asia and blended with high-grade ore from the miner’s Northern System operations. Itabira production stood at 9.8 million MT in the July-September period, down 10% year-on-year, Vale said in its latest production report.
A futures analyst in Singapore believes that the suspension of the mining activities at the Itabira complex had initially caused some supply jitters during the morning trading session of China’s futures market, while a broker also observed stronger trading activity on the 62% iron ore derivative on the Singapore Exchange (SGX).
China’s benchmark January iron ore futures contract opened with a rally on Tuesday morning, rising by more than 1%, but the price retreated during the day before upticks again in the afternoon to end moderately higher day-on-day. SGX’s November 62% Fe contract traded around USD1.50 per MT higher than a day earlier late in the day.
The November 65/62% Fe derivative spread traded at USD10-10.25 per MT in the day, widening from USD9.70 per MT last Friday and on Monday, according to sources. This is amid buying an interest in and strong premiums for the high-grade Iron Ore Carajas, and softening premiums for the mid-grade Pilbara Blend fines, market participants said.
November-index-linked cargoes of PB fines already traded at a premium of USD2.80-3 per MT, down from around USD4 per MT a week ago, they added. Separately, Fortescue Metals Group (FMG) has kept its downward price adjustments unchanged at 12% and 7% respectively for November term-contract shipments of its 56.5% Fe Super Special fines and 58.2% Fe Fortescue Blend fines, according to sources.
For its 57.3% Fe Kings fines and 60.1% Fe West Pilbara fines, FMG is narrowing the price adjustments to 6% and 1% respectively, from 7% and 2% for October shipments. Those adjustments are based on a 62% Fe index with Fe content adjusted.
QUOTE OF THE DAY
“Although less blending component coming from the Itabira mine due to the dam suspension could affect the output of Brazilian Blend fines, the volume is actually quite negligible,” a China-based trade source said.
PORT PRICES
Pilbara Blend fines traded at 670-680 yuan per MT in Shandong province and Tangshan city on Tuesday, compared with 670-690 yuan per MT a day earlier, according to sources. The latest range was equivalent to USD 88-89.40 per MT CFR China in the seaborne market.
DALIAN COMMODITY EXCHANGE
The most-traded January iron ore futures contract closed at 616 yuan per MT on Tuesday, up by 4.50 yuan per MT from Monday’s closing price.
Report By: Shahriar Yusefi
