China’s iron ore market saw more trade activity for higher-grade imported iron ore products such as PB Fines, Carajas Fines, imported iron ore concentrates and lumps recently, Chinese market sources said on Wednesday, suggesting better margins on their finished steel had encouraged mills to upgrade.
“Recently, steel mills in Shandong (in East China) have tended to buy more higher-grade iron ore products for their near-term production as their finished steel profit margins are gradually recovering,” a Qingdao-based iron ore trader explained. “On the other hand, lower-grade ore products are less popular as their prices are not so attractive now,” he told Mysteel Global.
He admitted that currently, his company’s inventories at hand include PB Fines and Lumps and Newman Fines and Lumps, and that his company has no plans for now to buy any lower-grade iron ore products.
According to him, the profit margins that some Shandong steelmakers are earning had risen to Yuan 400-500/tonne ($57-71) recently amid the recovery in domestic steel prices.
Over the past several weeks, the improved steel market sentiment has seen domestic steel prices rebound substantially, with Mysteel’s national average benchmark price for HRB 400 20mm dia rebar up another Yuan 156/t on week as of November 19 to refresh its 3.5-month high of Yuan 4,052/tonne including 13% VAT.
An iron ore procurement official with a Shanxi-based mill in North China told Mysteel Global that currently, their consumption of higher-grade iron ore products remained largely stable, but he pointed out that right now, lower-grade ore products are losing their price edge if the freight distance is too far.
Another Shandong-based trader also remarked that currently, more bids for Carajas Fines are also being placed by steel mills in North and East China, though he noted that the growth in finished steel profit margins was not the only reason.
“The prices of ore products such as Carajas Fines and some imported iron ore concentrates are still more affordable, compared with some domestic concentrates – especially in the sintering process for some steel mills – so the gradual increase in consumption among mills is supporting these products’ prices now,” he added.
Moreover, the frequent emergency curbs on steel mills’ sintering and pelletizing operations in North and East China was also a reason for the greater lump demand in the Chinese market currently, Mysteel Global noted.
The firmer demand for these higher-grade iron ore products had lent more support to prices for port inventories over the past several weeks, especially in Shandong.
As of November 19, Mysteel’s price of 61.5% PB Fines at Rizhao port, for example, had increased by Yuan 21/wmt on week to reach Yuan 643/wmt, while the price of 65% Carajas Fines was at Yuan 730/wmt at the same port, up Yuan 39/wmt on week. The price of 62.5% PB lumps was also higher by Yuan 22/wmt on week at Yuan 779/dmt, all in terms of FOT and including 13% VAT.
By comparison, on the same day the price of 56.5% Super Special Fines had just gained Yuan 3/wmt on week to reach Yuan 525/wmt FOT and including 13% VAT, while the price of 66% domestic iron ore concentrates in Tangshan had actually dipped by Yuan 14/wmt on week to Yuan 759/wmt EXW and including 13% VAT.
Also on November 19, a cargo of Brazilian concentrates with an Fe content of around 66.38% and silica content of around 3.45% was sold for Yuan 675/wmt including 13% VAT at Lianyungang port in East China’s Jiangsu, Mysteel recorded.
This article has been published under article exchange agreement between Mysteel Global and SteelMint.
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