Brazilian 65% Fe fines premium averages $8.91 in March, pricing mechanism under review

The spot premium for 65% Fe Brazilian fines has dropped by more than one third since the start of the year.

Paragraph entered by Atlantic migration, in order for SteelFirst articles to display correctly on Metal Bulletin.

The daily Metal Bulletin 65% Fe Brazilian Premium index cfr Qingdao has fallen from an average of $13.38 per tonne in January to $8.91 per tonne in March.

On February 7 the index reached a year-to-date-high of $15 per tonne, before falling to a year-low of $7 per tonne on March 20. The index recovered by March 31 to reach $10.50 per tonne and has been stable since.

The fall comes as Chinese mills, suffering from tighter credit, are unable to pay high premiums for good quality fines.

The fixed premium for the first quarter for Carajas fines was $9 per tonne, with the rate determined via negotiation between Chinese mills and Brazilian miner Vale.

The pricing system is now understood to be under review allowing customers potentially to determine the price of high grade fines by using two floating prices. This would eliminate the need to negotiate a fixed premium.

New pricing mechanism

Vale is offering Chinese mills an alternative pricing option to settle second quarter contracts for high-Fe content Carajas iron ore, Steel First understands.

Mills can opt for a new formula based on the Metal Bulletin 62% Fe iron ore index in combination with the Metal Bulletin 65% Fe Brazilian Premium index: (MBIO62% index+65% premium)/65%*Actual Fe content, sources at several Chinese steelmakers told Steel First this week.

Under this new pricing model, mills would have paid $131.57 per tonne for first quarter contracts.

Metal Bulletin launched the daily 65% Fe Brazilian Fines index on January 6, 2014.

For more information on Metal Bulletin’s iron ore pricing portfolio please contact mbioi@metalbulletin.com.

What to read next
A 120-day closure of four Illinois dams scheduled for 2023 will disrupt barge shipments and have potentially both negative and positive impacts on scrap and finished steel products from Canada to Texas
Market participants are cautiously optimistic about a rebound in iron ore concentrate premiums, with steelmakers around the world set to ramp-up production in line with an anticipated increase in demand for steel products, Fastmarkets understands
General Motors (GM) is investing $650 million to develop the Thacker Pass mine in Nevada, the largest known source of lithium in the US and the third largest in the world
Electrolysis processes developed by Boston Metal and Electra that eliminate the need for coal in steel production could be key to a net-zero emissions future for the metallics industry, attendees learned at Fastmarkets’ conference on January 17-19 in Dallas
Low supply, strong demand to spur scrap prices higher in Feb, market says
We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
Proceed