Posted on 01 Jul 2021
Prices of lower Fe grade iron ore fines, especially those of Super Special Fines and Jimblebar Fines, are weakening in China’s iron ore market, with their price spread against medium to high Fe grade fines such as PB Fines reaching multi-year highs, market sources said on Wednesday.
The price spread between 61.5% Fe PB Fines and 56.5% Fe Super Special Fines at Qingdao port in East China’s Shandong province as assessed by Mysteel had surged to a record high in the mid-April, and then continued to spread wider to reach a new record of Yuan 445/wmt ($67.6/wmt) on June 24. By June 29, the spread had narrowed but only slightly to Yuan 437/wmt.
Similarly, the price spread between 61.5% Fe PB Fines and 60.5% Fe grade Jimblebar Fines at the same port had also climbed to all-time high in mid-May before increasing further to Yuan 178/wmt on June 28, before narrowing a little later that day to Yuan 171/wmt later. Both are FOT-base and include 13% VAT.
“These lower Fe grade iron ore fines have been largely unattractive to Chinese steel mills for a long time, and recently the trend has become more obvious,” a Shandong-based iron ore trader commented.
The rather healthy steel margins that Chinese steel mills had enjoyed previously, especially over April-May, had driven most steel mills to use more higher Fe grade iron ore products to lift their steel production as high as they could, the trader explained, especially when some mills in North China needed to observe restrictions on their blast furnace operations.
“Even though steel margins have declined a lot, for the time being the higher alumina content of these ore products will still prevent many steel mills from using more of them,” the trader added.
Currently in China’s spot market, available stocks of mid-range alumina-content products such as PB Fines and Newman Fines, as well as those of lower alumina products such as Carajas Fines and domestic iron ore concentrates, are all tight. This is lending solid support to these products’ prices, he said.
In contrast, supplies of Super Special Fines and Jimblebar Fines in the China market are rather abundant which, together with the weak demand, is enticing some iron ore traders to focus less on prices and more on just making sales. This in turn has accelerated the decline in their prices and also resulted in the widening price-spread between them and other medium to higher Fe grade ore products, Mysteel Global notes.
For reference, Mysteel data showed that the total of Brazilian iron ore stocks including Carajas Fines at 45 Chinese ports had declined to an eight-month low of 34.48 million tonnes by June 24. As of June 17, iron ore concentrate inventories among the 186 Chinese mining companies Mysteel regularly tracks had also decreased to 1.2 million tonnes, the lowest since Mysteel started monitoring these stocks in January 2019.
Source:Mysteel Global
