The typical understanding of high-grade iron ore is a product with iron content higher than 65% in couple of years. But sources told Fastmarkets that this could change, given the increased supply and demand for pellet feed around 68-70% Fe and the commission of world’s largest high-grade iron ore Simandou project.
Fastmarkets’ daily index for iron ore 65% Fe Brazil-origin fines, cfr Qingdao was calcuated at $107.11 per tonne on Tuesday May 27, down by $1.15 per tonne from Monday.
Cost-saving measures and steel decarbonization challenges
In the short term, the cost-saving measures applied by Chinese steel mills have partially threatened high-grade iron ore demand. But most market participants still see high-grade iron ore as a crucial element in reducing carbon emissions in blast furnace-based steelmaking in the long run, sources said.
“China’s transition to electric-arc furnace-based steelmaking with DRI raw materials might be slower and will remain [reliant] on blast furnace-based steelmaking [capacity],” Anglo America’s regional sales manager for Middle East and North Africa Dave Tan said in a panel discussion at SIFW on Wednesday May 28.
“To reduce carbon emission, one of the routes is to use more [high-grade] pellets,” Tan added.
A high-grade iron ore seller also told Fastmarkets that China’s demand for high-grade imported iron ore remained limited this year. And that it has been hard to raise the price or see price premiums, adding that they have focused more on maintaining market share in the short term.
Supply challenges and market competition
From a supply perspective, high-grade iron ore producers told Fastmarkets that they face challenges or competition. This is given new volumes, which would mostly originate from Brazil, Canada and West Africa, expected to come online from end-2025.
“We’ve been focusing on managing costs and production to produce something is value-added, and we’re comfortable on the cost…Some producers might be impacted after the Simandou project come online,” Champion Iron’s vice president for sales, technical marketing and product development François Lavoie said in a panel discussion at SIFW on Wednesday.
Diversification and future projects in high-grade iron ore
Lavoie added that diversifying the iron ore product portfolio into the DR-grade pellet feed market could help to mitigate the effect of surplus supply of typical high-grade iron ore.
Champion Iron’s DRPF project, aimed at upgrading half of Bloom Lake’s capacity of 15 million tonnes to DR quality pellet feed to 69% Fe, is progressing on schedule and on budget, with commissioning expected in December 2025, according to the company’s quarterly report which was published on January 29.
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