Seaborne iron ore prices strengthen on buying activity
The Asian seaborne iron ore market continued to strengthen Friday on traders’ restocking. The 62% Fe Iron Ore Index was assessed at USD 95.45/dry MT CFR North China Friday, up USD 0.3/DMT on day. The front month June TSI swap was up USD 1/DMT on day at USD 93/DMT.
“Although Australian miners have ramped up iron ore production, port inventory still went down by around 1 million MT on week,” a Singapore-based trader said. Steel mills in China were actively restocking this week, and blast furnaces' utilization rate was on the rise, sources said.
Turkish imports of premium heavy melting scrap was assessed at USD 286.50/MT CFR Friday, down USD 9.50/MT from Thursday. One Baltic recycler sold to an Iskenderun based mill one cargo consisting of 23,000 MT at USD 286/MT and 7,000 MT of bonus material at USD 296/MT CFR Turkey for May shipment, normalized to USD 286.50/MT CFR. The deal was concluded Friday and confirmed by the seller and the buyer.
Sources said there were no traders offering Brazilian blend fines in the seaborne market, and traders who have BRBF at ports were trying to sell slowly as supply was tight. Some end-users turned to buy Sudeste fines or IOC6 fines from ports as substitutes amid a shortage of Vale's southern system fines, a Shanghai-based trader said.
After the Platts Market on Close assessment process, Vale sold a 170,000- MT cargo of BRBF at USD 100.50/DMT on 62% Fe basis on globalORE, loading June 13-22. Vale also sold a 140,000-MT cargo of IOCJ at USD 111.50/DMT on 65% Fe basis, loaded May 6 on COREX.
The alumina differentials were assessed 1%-2.5% at USD 5.5/DMT, up from USD 5/DMT on day. Although the quality of Jimblebar blend fines has come down recently, discounted medium grade fines remained popular.
"There are not many choices for steel mills, and supply is tight in general," an international trader said. Traders who were running out of inventory were actively buying in the seaborne market and eying reselling opportunities at ports. Port transactions were not liquid Friday as sellers increased offers in the afternoon, with end-users unwilling to meet the high offers. Tight supply of lump has made seaborne offers in great demand. A trader who was offering Pilbara Blend lump in the market said they received a lot of price inquiries.
At the same time, port liquidity of lumps was going down. "Lump is the most expensive feedstock in the market now," a procurement source from Hebei said. Platts assessed the spot lump premium at 32.5 cents/dry MT unit. Domestic concentrate producers increased selling prices early this week, and demand remained strong.
With another round of environmental control in Shanxi province, supply of domestic concentrates was heard getting tighter in the region. Low alumina content, high iron content, and cost effectiveness of domestic concentrates has made the product the best feedstock for mills in China, sources said.
Platts assessed the 66% Fe domestic concentrate at Yuan 850/DMT delivered to mills in Tangshan Friday, up Yuan 20/DMT on week. Platts' iron ore 62% Fe iron ore port stock index, or IOPEX North China, was assessed at Yuan 690/wMT FOT, up Yuan 6/MT on day, or at USD 93.48/DMT on import parity basis. IOPEX East China was assessed at Yuan 690/wMT FOT, up Yuan 6/MT on day, or at USD 93.48/DMT on import parity basis.
Vale iron ore output may reach 400 million MT within three years
Sao Paulo—Brazilian miner Vale sees the possibility of reaching the 400 million MT iron ore output levels within two to three years, Chief Financial Officer Luciano Siani Pires said Friday. “Considering the 90 million MT that are currently standing, a third of it is related to Brucutu, another third is related to the dry operations of Alegria, Timbopeba and Vargem Grande, and the other third is related to wet mining,” said Siani Pires during an earnings conference call.
“We expect Brucutu to return soon, and the other one-third related to the other dry operations I believe between six to 12 months. The complementary wet operations, however, from two to three years,” Siani Pires said. According to Siani Pires, Brucutu iron ore mining complex is operating at 10 million MT/ year of its 30 million MT/year capacity.
Vale’s estimate of iron ore sales volume between 307 million MT and 332 million MT for 2019 depends on Brucutu. “We are upgrading depending on Brucutu. If Brucutu produces, we will be closer to the middle of the track, and if does not produce, more towards the bottom of the track,” Siani Pires said. Vale posted Wednesday its combined first-quarter shipments and production of iron ore fines and pellets, down year on year by 19.7% and 10.2%, respectively, following the January rupture of the company's Brumadinho tailings dam. Iron ore fines shipments reached 55.41million MT in Q1, 22.2% below the year-ago quarter, according to company data in its production report. Production in turn, fell 11.1% to 72.87 million MT. Pellets sales dropped 6.2% to 12.31 million MT in total shipments, while production dropped 4.7% to 12.17 million MT.
Report By: Encieh Arbabi
