Prices for seaborne iron ore concentrate and pellets plunged in the week ended Friday September 10 due to concerns over demand for high-grade products amid mill inspections in China’s Jiangsu province.
Fastmarkets iron ore indices
۶۶% Fe concentrate, cfr Qingdao: $۱۵۱٫۲۵ per tonne, down $12.75 per tonne.
۶۵% Fe blast furnace pellet, cfr Qingdao: $۱۸۷٫۹۱ per tonne, down $14.42 per tonne.
Iron ore pellet premium over 65% Fe fines, cfr China: $۳۳٫۳۰ per tonne, down $0.40 per tonne.
Key drivers
Ongoing steel output cuts in China, along with expectations of further restrictions on output, remained the main cause of weak demand for high-grade iron ore such as concentrate and pellets, a buyer source in southern China told Fastmarkets.
Sentiment deteriorated last week after local authorities in Jiangsu province said it would conduct inspections on steel projects with high energy consumption and emissions, he said.
Local authorities in Jiangsu province will inspect local enterprises with high energy consumption and emissions, including steel mills, to determine their compliance of decarbonization measures, a notice released by the provincial Department of Industry & Information Technology said.
Market participants expect such inspections to be implemented in other provinces in the months to come, which weakened their outlook for the concentrate and pellets segments of the iron ore market, the buyer source added.
An analyst in Shanghai said last week that liquidity of seaborne iron ore concentrate was limited, and that most cargoes of sintering concentrate were traded at even larger discounts compared with the previous weeks.
A trading source in northern China said that since there was talk of sintering restrictions being imposed in Tangshan during the winter, he was expecting demand for concentrate used for sintering to weaken in the months to come.
Meanwhile, sources reported a drop in buying interest for seaborne pellets despite the availability of few offers in the Chinese market.
A trading source in Hong Kong said Indian pellets were being sold at relatively higher prices in India’s domestic market compared than to China. As such, more Indian producers will likely focus on supplying the Indian market, he said.
ArcelorMittal and the government of Liberia have reached an agreement to increase the output of premium iron ore in the West African nation to 15 million tonnes per year, with the first iron ore concentrate expected in late 2023.
Brazil’s Vale has lowered its forecast for iron ore production for 2022 to 370 million tonnes from 400 million tonnes as a result of a slower ramp-up of operations in northern Brazil. It also expects a slower ramp-up of its 10-million-tpy Gelado pellet feed project.
Quote of the week
“Typically, demand for pellets as well as other high-grade iron ore will increase during winter because of sintering restrictions, but steel production cuts have changed such a seasonality and steel mills in China could show less interest in pellets, which would result in prices and premiums for pellets maintaining a downtrend,” a trading source in Shanghai said.
Trades/offers/bids heard in the market
Concentrate
Spot market, 170,000 tonnes of 63.87% Fe Pellet Feed Fines Guaiba 2, traded at Fastmarkets’ index for iron ore 65% Fe Brazil-origin fines, cfr Qingdao for the month of the notice of readiness (NOR) at the port of discharge, plus a discount of $12.50 per tonne, bill of lading August 21.
Spot market, 170,000 tonnes of 65% Fe low-sulfur Ukrainian concentrate, traded at the average of a 65% Fe index for the month after the NOR at the port of discharge, plus a discount of around $3.50 per tonne, September arrival.
Spot market, 100,000 tonnes of 66% Fe Chilean concentrate, traded at the average of a 65% Fe index for the month of the NOR at the port of discharge, plus a premium of $1 per tonne, September arrival.
Spot market, 64% Fe SMIS Magnetite Pellet Feed, offered at the October average of a 65% Fe index and its value-in-use, plus a premium of $1 per tonne, October arrival.
Pellets
Spot market, 64% Fe KIOCL pellets, offered at $161 per tonne fob India, September loading.
Spot market, 63% Fe KIOCL pellets, offered at $177 per tonne cfr China, September loading.
Spot market, 63.5% Fe Godavari pellets, offered at the September average of a 62% Fe index plus its pellet premium and a premium of $10 per tonne, laycan September 20-30.
Spot market, 64% Fe BRPL pellets, offered at the October average of a 62% Fe index plus its pellet premium, mid-October loading.
Spot market, 65% Fe Godavari pellets, offered at the October average of a 65% Fe index plus its pellet premium and a premium of $1 per tonne, end-October loading.
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