Iron ore at near 5-year high on strong buying
Asian seaborne iron ore market prices continued to rise Friday amid traders restocking, reaching the highest level since August 2014. The 62% Fe Iron Ore Index was assessed at USD 95.80/DMT CFR North China Friday, up 80 cents/DMT from Thursday. The front-month May TSI swap was up USD 1.20/DMT from Thursday at USD 94.05/DMT.
"Iron ore market is still on the uptrend due to less supply from miners and better steel performance," two traders said. Traders were being aggressive in taking cargoes, expecting iron ore prices to go up further. "We are offering May loading cargoes in the market. Most of the bids were from traders instead of steel mills," a seller said. Dockside iron ore inventory was heard down by over 6 million MT on week, and some sources expected it to go down more next week.
Vale was heard with a delayed shipment schedule of IOCJ fines, by 1-2 weeks, to customers in China due to heavy rains at loading ports earlier. "We received many bidding inquiries from end-users," said a Carajas fines seller at ports. Some traders said that spreads between 65% and 62% Fe have a chance to widen further, supported by improved steel margins.
A private steelmaker said that steel margins have recovered to Yuan 600-800/WMT level, and so end-users would prefer to use higher iron content products. China's new Yuan loans exceeded expectations for March, while aggregate financing to the real economy in Q1 went up by Yuan 2.34 trillion (USD 348 billion) compared to the same period last year.
China economy seen recovering
"It shows that the Chinese economy is recovering, and that is a good sign for steel demand," a Beijing-based source said. Market sources said that supply of Pilbara Blend lump was getting tighter in the spot market, and offers of PB fines co-loaded with PB lump were getting higher, in line with fines offers. "With improved steel margins, I believe end-users would have more interest to use high-grade products such as lumps and pellets," a Chinese trader said.
Floating price for Kumba lump was heard improved in the spot market, from discount to flat, a Shanghai-based trader said. The spot lump premium was assessed at 31.5 cents/DMT unit, flat on day. Domestic concentrates suppliers increased prices on week. Procurement sources from Hebei said that 66% Fe domestic concentrates was done at around the Yuan 820/DMT level.
"It is still Yuan 100/DMT cheaper than imported concentrates, and end-users are unlikely to lower down usage ratio," said a Hebei-based steelmaker. Some private domestic-concentrates producers were eyeing the reopening of mines, which may increase total domestic ores supply for this year.
The 66% Fe domestic concentrate was assessed Yuan 820/DMT delivered to mills in Tangshan Friday, up Yuan 30/DMT on week. 62% Fe iron ore port stock index, or IOPEX North China, was assessed at Yuan 688/WMT FOT, up Yuan 4/WMT on day, or at USD 94.18/DMT on an import-parity basis. IOPEX East China was assessed at Yuan 680/WMT FOT, up Yuan 6/WMT on day, or at USD 93.00/DMT on an import-parity basis.
Report By: Shahriyar Yusefi
