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NEWS
| High-grade iron ore fines lose steam |
With lukewarm production margins keeping demand for high Fe fines on the back burner, as mills pivoted toward lower iron content materials for cost competitiveness, a China-based iron ore trader said “Lower Fe fines are in greater demand now, so we see a narrower spread between 65 and 62 [% Fe fines].”
According to sources, dull HRC and rebar margins have also been reflective of mills’ preferences in moving away from the usage of high Fe fines, with the cost of production remaining a pertinent consideration for their operations.
Demand for IOCJ fines from steel mills has been lackluster amid poor finished steel production margins in China, where most domestic steel mills prefer to use medium-grade fines instead of high-grade fines, S&P Global reported earlier.
“It makes sense since steel profits are not doing good, 65%- 62% Fe spread should narrow further,” an east China-based iron ore trader said.
Meanwhile, the Asian iron ore market has witnessed positive import margins for close to three months, when seaborne purchases were more cost-competitive on an import-parity basis,
compared with equivalents from the Chinese portside. “No one will use high-grade fines when margins are bad [and] medium-grade fines are seeing import margins in October,” a
north China-based iron ore trader said.
Heavy rains in Brazil have not affected the export volumes of Carajas fines, said an international trader, adding that the export volumes remained resilient amid no supply tightness heard for high Fe fines in the market. “There may be some impact from the rains but since it’s an annual occurrence, that seasonal impact has already been factored in,” a second north China-based iron ore trader said.
From Q3 to date, there have been nine trades of IOCJ in the seaborne market so far with an aggregate volume of 1.54 million mt, up from 1.12 million mt in Q2, according to S&P Global data. The volume is also much higher from 1.07 million mt in Q1.
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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