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NEWS
| Seaborne iron ore prices advance on strong steel margins |
Seaborne iron ore prices got a boost April 7 from high steel margins in China.
Global Platts assessed the 62% Fe Iron Ore Index at $172.90/dry mt CFR North China on April 7, up $2.05/dmt from April 6.The front-month May 62% Fe derivative was up $2.80/dmt from April 6 to $164.70/dmt on April 7.
Despite the weakness in iron ore demand from Tangshan mills due to strict emission controls, sentiments for seaborne prices were lifted by the wide steel margins for both rebar and HRC across China.
Market sources saw flat steel margins in Northern China climbing towards Yuan 1000/mt and expected margins to improve further with continued regional production curbs and traditional peak season for downstream steel demand from April to May.
There were more Australian iron ore fines cargoes available in the market, meanwhile on the demand side, buying interests were focused on products with higher ferrous content and lower impurities.
“Higher seaborne prices compared with port stock prices is encouraging mills to resell term-contract cargoes and procure from the quayside instead.” An end-user source based in Southern Seaborne pellet fixed prices strengthened in the week to April 7 amid preference for better quality cargoes as the Chinese steel margins continue to hold firm.
Global Platts assessed the spot blast furnace pellet premium to the 62% Fe Iron Ore Index assessment at $61.45/dry mt CFR North China on April 7, down $3.20/dmt from March 31, after adjusting to a 65% Fe basis.
The 64% Fe blast furnace pellet was assessed at $212.50/dmt CFR North China on April 7, up $5.30/dmt week on week. The premium was assessed at $42.50/dmt CFR North China, down $4.15/dmt on the week.
High Fe content and low alumina pellet cargoes were still in demand by the market, but cargoes with more than 3% alumina faced increased selling pressure and thin liquidity due to poor downstream demand from Chinese steelmakers.
“Stocks at portside does not seem to be moving and inventory is accumulating,” said a Shanghai-based trader source. “Mills are looking to improve production efficiency and increase the Fe level of the overall raw material blend but find most available Indian pellet cargoes not suitable due to their higher alumina levels,” a Chinese trader source said.
Regional production controls in Tangshan have been depleting steel inventory and steel margins have surged, leading to lower tolerance for alumina impurities as mills look for higher quality cargoes, several Chinese trader sources said.
A steelmaker source based in Southern China said, “For mills located in regions with slack environmental controls, increasing higher Fe sinter usage is more cost-efficient than using pellets.”
Meanwhile in Hebei, imported pellet faced the price competition from domestically produced alternatives as Tangshan 66% Fe concentrate prices slumped more than Yuan 200/dmt in recent weeks, said a steelmaker source based in Hebei.
The continued strength of domestic pellet prices in India have resulted in Indian cargoes slated for export being diverted for domestic sales as higher profits are realized faster. Several Indian sources cautioned that with new cargoes being sold domestically instead of being exported, available seaborne cargoes for May and June could decrease, pushing up seaborne pellet prices.
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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