China’s steel mills are consuming more higher Fe grade iron ore products such as Carajas Fines, iron ore lumps and pellets, which has seen active trading on these products and firm prices, according to market sources on Wednesday.
“One reason for this trend is due to the high coke prices. Higher Fe grade iron ore products needs less coke,” a Rizhao-based iron ore trader in East China’s Shandong remarked. And the other reason was that many steel mills, especially those in North China and East China have to consume and stock up more lumps and pellets – the alternatives of sintered ore, as the sintering operations have been frequently limited by local governments from time to time during the winter season when the air quality deteriorates, according to him.
The rather tight coke supply has prompted China’s coking plants to request for a price increment for their metallurgical coke customers by another Yuan 100/tonne ($15.5/t) effective January 13, and this has been the 13th round of prices rise since mid-August 2020 by a total of Yuan 800/t. And before this round of increase, as of January 12, Mysteel’s national composite coke price had hit its nearly 26-month high of Yuan 2,427/t including the 13% VAT.
A Qingdao-based iron ore trader also in Shandong noted that due to the robust demand among steel mills, recently the trading for higher Fe grade iron ore products was active.
“Moreover, many mills did started to restock up more iron ore tonnages for the upcoming Chinese New Year holiday (over February 11-17), so the demand is even better now,” he said. According to him, as the supply of these products, especially pellets and concentrates, compared to those mainstream Australian iron ore fines products is not that stable and large scale, so many mills started the restocking earlier.
However, for the supply side, the trader mentioned that the overseas supplies, especially those of imported iron ore pellets are rather limited and many higher-grade iron ore resources are also concentrated among some traders, which together with the firm demand lend strong support to these iron ore brands’ prices.
As of January 13, Mysteel’s price of 62.5% PB lumps at Rizhao port, for example, increased by Yuan 97/wmt on week to reach Yuan 1,405/wmt, and the price of 65% Carajas Fines was at Yuan 1,299/wmt at the same port, up Yuan 57/wmt on week.
Meanwhile, as of the same day, the price of 63% Ukrainian pellets was assessed at Yuan 1,475/wmt, up Yuan 30/wmt on week, and the price of 65% Ukrainian concentrates rose by Yuan 130/wmt on week to reach 1,320/wmt, all in terms of FOT and including 13% VAT.
By contrast, Mysteel’s price of 61.5% PB Fines just grew by Yuan 16/wmt on week to Yuan 1,134/wmt by Wednesday.
At Chinese ports, the stocks of lumps, pellets and concentrates are all declining now, with the lump stocks at China’s 45 ports dipping for the third week by a remarkable 1.72 million tonnes or 7.7% on week to 20.79 million tonnes as of January 7, or a low since mid-May, while the pellet stocks had declined to a low of 5.97 million tonnes since late April by the same day. And the concentrates stocks at these ports also declined for the third week by 2.3% on week to reach 9.8 million tonnes, or a low since late July.
Written by Victoria Zou, zyongjia@mysteel.com
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
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