Some mainstream overseas iron ore brands may appear in under-supply at China’s ports, as the demand for such products from the Chinese steel mills will probably stay robust with the remaining high steel output, and at the same time the congestion at some ports makes it difficult for the new arrivals to be unloaded timely, according to the Chinese market sources.
Among the mainstream brands, some medium- to high-grade iron ore supplies from Australia including PB Fines, Newman Fines, Mac Fines and Jimblebar Fines are hotly pursued by most of the Chinese steel mills for their comparative cost effectiveness, but their low availability at the Chinese ports and congestion at some ports is supporting the iron ore prices up further, according to an official from a steel mill in Shandong of East China.
By August 6, imported iron ore inventories at China’s 45 major ports reversed down on week after a six-week gain, dipping by 0.5% to around 113.5 million tonnes, among which, the Australian iron ore volume declined for the second week and more substantially by 2.2% on week to about 61.2 million tonnes, as reported.
Meanwhile, the Chinese steel mills have been running and will be running at high steel output “when we still have some steel margins,” the Shandong official said, and “to maintain our steel production, we have to adjust our blending of different iron ore products to control our production costs as the best as we can when the iron ore prices have been soaring,” he added.
Mysteel’s survey about the blast furnace capacity utilization among China’s 247 steel mills surged to 94.75% as of August 6, or a new high since Mysteel updated the samples in the survey in January 2019.
The Shandong mill, thus, has increased the feeds of higher-grade Carajas Fines and lower-grade Super Special Fines and Indian Fines as substitutes, according to the official, which are with relatively abundant supply, as by August 6, the Brazilian ore at China’ 45 ports grew for the third week by 3.2% on week to about 26.53 million tonnes, according to Mysteel’s survey.
Brazilian iron ore vs Australian iron ore at the 45 ports
The low availability of popular Australian iron ore brands may not improve in the near term, as the average daily iron ore discharge rate from China’s 45 ports rose to 3.16 million t/d by the first week of August, or up 3% from July’s average volume, according to Mysteel’s survey.
Besides, some ports in North and East China, however, are having serious port congestion, with some ships having to wait around six days to be unloaded at the ports in Shandong, much longer than the normal waiting of 0-2 days, the Shandong official noted.
Windy and rainy days earlier on and the compulsory COVID-19 tests to the crew members that are on the vessel for less than 14 days have been the core reasons for the congestion, according to market sources.
“A confirmed COVID-19 case at a vessel will lead to a complete freezing of any operations until further tests are done and quarantines are fulfilled,” a Shanghai-based market watcher explained, disclosing that a recent incident happened at the Lianyungang port, East China’s Jiangsu province.
Under the present circumstances, Mysteel’s PORTDEX 62% Fe Australian soared to Yuan 924/wmt ($131.6/wmt) FOT Qingdao including 13% VAT on August 6, a new high since November 18, 2013, and Mysteel’s SEADEX 62% Fe Australian Fines touched $120.35/dmt CFR Qingdao on the same day, or the highest since July 19 2019.
The high iron ore prices for now have been bearable for the Chinese steel mills, as “some steel mills in South China are still enjoying steel margins ranging Yuan 200-300/tonne,” shared an iron ore trader in East China’s Jiangsu province.
China’s iron ore imports, therefore, had been running high up to July, with the monthly import volume at all-time high of 112.6 million tonnes, up 10.8% on month or up 23.8% on year, as reported.
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
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