Asian seaborne iron ore prices weakened June 29 as a recent price rebound lacked support from end-users. The 62% Fe Iron Ore Index was at $123.20/dry mt CFR North China June 29, down $1.80/dmt from June 28, according to the Platts assessment from S&P Global Commodity Insights.
Traders were mainly purchasing expecting a short-term rebound in prices, while end-users were not actively buying, according to sources.
The spread between the secondary market bid and offer levels for Pilbara Blend Fines, or PBF, widened on expectations of more stimulus measures amid easing pandemic controls in China in stark contrast with high steel stocks and negative steel margins. The physical structure between July- and August-arriving iron ore fines cargoes flipped to a contango. Some sources expect voluntary steel production cuts in some regions and the possibility of more
stimulus measures in the near term to encourage steel consumption. Rainfall could peak in July, allowing more construction activity afterward, sources said.
Chinese steel mills still preferred discounted fines due to pressured margins. However, some traders said low-grade fines, such as Super Special Fines, have become too expensive, and they were more interest in discounted medium-grade fines, such as Jimblebar Fines and MAC Fines, and PBF, the most liquid product.
Portside trading volume was lukewarm. IOPEX North China was assessed at Yuan 891/wmt FOT June 29, up Yuan 2/wmt from June 28, or at $124.29/dmt on an import parity basis. IOPEX East China was assessed at Yuan 889/wmt FOT June 29, up Yuan 5/wmt from June 28,
or at $124.02/dmt on an import parity basis. Although portside lump demand was scant as Chinese mills reduced lump usage amid poor margins and wet weather in Southern China, some sources said lump demand might have bottomed and a recovery in August was likely on improved weather and a potential rebound in steel demand. Rio Tinto sold an 80,000 mt cargo of Pilbara Blend Lump via bilateral negotiation June 29 at a premium of 11.50 cents/dmtu to the August average of the IODEX plus lump premiums, CFR Qingdao, loading August 14-23. The cargo’s expected arrival time in China could fall out of the Platts two- to eight-week assessment window. The spot lump premium was at 10 cents/dmtu June 29, up 0.2 cents/dmtu from June 28, according to the Platts assessment.
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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