Posted on 25 Aug 2020
Chinese steel mills are trying their best to adjust to the continuing high price of iron ore, especially prices of some mainstream medium- to high-grade iron ore brands, according to market sources on Monday.
As of August 20, Mysteel’s PORTDEX 62% Fe Australian Fines index had surged to its highest level in over seven years to reach Yuan 971/wmt ($140.3/wmt) FOT Qingdao including 13% VAT, as reported. The price stayed unchanged on August 21 to finally ending the week up Yuan 32/wmt.
Meanwhile, Mysteel’s SEADEX 62% Fe Australian Fines price had also refreshed a more than six year high to reach $128.65/dmt CFR Qingdao on August 19. Though by August 21 it had softened slightly to $125.95/dmt, it still settled higher by $5.2/dmt on week.
“The prices of mainstream medium- to high-grade iron ore products such as PB fines are rising very rapidly due to the limited supply at ports, and this is weighing on the steel mills’ margins. Consequently, some mills have started to adjust the blending of different iron ore products to control their production costs, aiming especially to lower their consumption of medium- to high-grade iron ore products,” a Shanghai-based market watcher remarked.
According to him, some mills in East China have reduced their PB Fines ratio but added more affordable Carajas Fines and Brazilian Blend Fines, while others with their own pellet plants were willing to raise the pellet consumption ratio. Meanwhile, some non-mainstream iron ore products such as Indian and South African fines were also alternative choices for some mills.
A Tangshan-based market watcher also confirmed that some local steel mills have gradually adjusted their consumption of different iron ore products, considering the rather high prices of some medium- to high-grade iron ore products. Some mills have consumed more Carajas Fines and Roy Hill Fines and some also had plans to add more imported iron ore pellets such as Indian pellets whose prices were low.
“Currently, available quantities of fines such as Jimblebar Fines, Mac Fines and Super Special Fines at ports in North China are rather limited,” he added.
Nevertheless, in general over the past week, iron ore procurement among the mills tended to be cautious, and undertaken largely according to their production needs, Mysteel Global noted.
Mysteel data showed that the daily trading volume of seaborne cargoes of imported iron ore which Mysteel tracks averaged 1.64 million tonnes/day over August 17-21, down 158,280 t/d or 8.8% on week.
Over the past week, imported iron ore inventories at China’s 45 major ports dipped for the third week, down another 813,300 tonnes or 0.7% on week to around 112.4 million tonnes by August 20, still mainly due to the serious congestion of newly arrived carriers at many Chinese ports.
Among total inventories, those of Australian iron ore declined for the fourth week by 1.6% on week to about 57.9 million tonnes, while stocks of Brazilian ore grew for the fifth week by 2.5% on week to about 28.4 million tonnes.
Written by Victoria Zou, zyongjia@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
Source:Mysteel Global
