Iron ore concentrate, pellet prices down despite post-holiday restocking by mills

Prices for seaborne iron ore concentrate and pellet decreased in the week ended Friday February 18 amid a downtrend in the high-grade fines sector, though some mills have started replenishing their inventories on an as-needed basis, market sources said

Key drivers

Overall fixed prices for seaborne iron ore concentrates and pellet eased last week because of the downtrend in the high-grade iron ore fines segment, an analyst in Shanghai told Fastmarkets.

Fastmarkets’ iron ore 65% Fe Brazil-origin fines index averaged $165.70 per tonne cfr China in the week ended February 18, down by $14.44 per tonne compared with previous week’s $180.14 per tonne.

The downtrend in the iron ore fines segment was largely due to the recent notices issued by Chinese authorities to remind market participants not to spread false information and deliberately build up high stocks – behaviors that might impact iron ore prices, the Shanghai-based analyst said.

Premiums for imported iron ore concentrates, however, increased slightly during the past week because some steel mills in south China started procurement on an as-needed basis after the country’s Lunar New Year holiday, market sources told Fastmarkets.

A mill source from south China noted that rising tensions between Ukraine and Russia might impact the shipment of Ukraine-origin iron ore products, adding that they had finished a first round of concentrate restocking this past week.

Premiums for high-grade iron ore pellet were largely stable over the week because seaborne iron ore demand and supply for Ukraine and Brazil pellet both remained limited without deals concluded, a trader source from south China said.

Seaborne iron ore demand was weak despite the ongoing sintering production cuts in north China, and this was probably due to mills having built up sufficient inventories prior to the Lunar New Year break and traders being cautious about partaking in speculative activity, market sources told Fastmarkets on February 18.

Tradable resources for imported high-grade pellets were limited partially due to the overall low supply in the first quarter and most of them were shipped to ex-China markets, such as the European steel market, sources said.

High-grade Ukraine and Brazil pellets were the only iron ore products with imported margins for traders recently due to the strong pellet prices at China’s port since last week, a trader source from south China said.

Fastmarkets iron ore indices

  • 66% Fe concentrate, cfr Qingdao: $170.94 per tonne, down $13.43 per tonne
  • 65% Fe blast furnace pellet, cfr Qingdao: $218.59 per tonne, down $13.44 per tonne
  • Iron ore pellet premium over 65% Fe fines, cfr China: $54.40 per tonne, down $0.60 per tonne

Brazilian pellet and Ukraine pellet were traded at 1,620-1,670 yuan ($256-263) per tonne at Chinese ports on Thursday. The prices are higher than seaborne cargoes and this should have prompted buying interest for seaborne pellets but failed amid the overall weak iron ore fines market,” a trader source from south China said.

Trades/offers/bids heard in the market

Concentrate
No visible activity.

Pellets

  • Spot market, 55,000 tonnes of 63% Fe Rashmi pellets, offered at $183 per tonne cfr China, February loading.
  • Spot market, 55,000 tonnes of 63% Fe KJS pellets, offered at $185 per tonne cfr China, February loading.
  • Spot market, 55,000 tonnes of 63% Fe BRPL pellets, offered at the March average of a 62% Fe index plus a premium of $39 per tonne, February loading.
  • Spot market, 50,000 tonnes of 63% Fe KIOCL pellets, offered at the March average of a 62% Fe index plus a premium of $50 per tonne, February loading.
  • Spot market, 75,000 tonnes of 62.5% Fe AMNS pellets, offered at the March average of a 62% Fe index plus a premium of $41-42 per tonne, February loading.

Alex Theo and Norman Fong in Singapore contributed to this report.

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