Tightening production curbs in Hebei slashed seaborne iron ore prices on potential demand downside. S&P Global Platts assessed the 62% Fe Iron Ore Index at $165.70/dry mt CFR North China on March 12, down $5.35/dmt from March 11.
On March 11, “the Minister of the Ministry of Ecology and Environment of China went to Tangshan City, located in Hebei Province, to inspect the execution of emergency emission reduction measures for heavy pollution weather of iron and steel enterprises.” The government body said in a note released late March 11.
The derivatives market jittered on the Tangshan inspection news with the front-month March 62% Fe derivatives dropping by $5.15/dmt from March 11 to $159.95/dmt on March 12.
“Our blast furnaces and sintering plants are executing an overall production cut of more than 50%,” said a steelmaker source based in Tangshan.
While some market participants expected the strict production cuts to hamper iron ore demand further, others saw support for medium- to higher-grade iron ore fines demand on the back of healthy steel margins.
“Carbon-neutrality is a longer-term target,” a Northern China based end-user source said, adding “in the near to medium term, however, mills are inclined to keep production levels high due to stable steel margins and expectation of improving steel demand in April.”
A spot tender for 300,000 mt of 65.36% Fe, 1.90% SiO2, 1.25% Al2O3 Brazilian Carajas (expected) was heard sold by Vale at a premium of around $5.9/dmt over the 65% Fe index basis, 65% Fe, final loading on Feb. 27.
Despite the lack of spot liquidity for domestic concentrate transactions in Tangshan amid trucking and production restrictions in the week, end-user sources saw prices unchanged due to steady direct feed demand.
Platts assessed the 66% Fe domestic concentrate at Yuan 1,380/dmt on March 12, delivered to mills in Tangshan, flat from March 5.
For lump, several steelmaker sources were looking to reduce lump usage due to the recent increase in its costs. However, “the change should be gradual and the recent sintering curbs may still provide some support to lump demand in the near term” said a Chinese trader source.
S&P Global Platts assessed the spot lump premium at 51.05 cents/dry mt unit on March 12, flat from March 11.
Disclaimer: this article is from the SBB STEEL MARKET DAILY, the copyright belongs to the original author, and only represents the original author's viewpoint.
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