Iron ore concentrate, pellet prices track uptick in fines segment; demand remains limited

Seaborne iron ore concentrate and pellet prices rose during the week ending on Friday June 3, tracking the upward momentum in the iron ore fines segment, market sources said

Key drivers

Buying interest in high-grade raw materials such as iron ore concentrate and pellet remained limited, a Singapore-based trader said.

Steel margins were still considered narrow, and that has largely hindered steel mills’ thoughts of consuming high-grade raw materials, the same trader said, adding that most were still focused on keeping production costs reasonable and preferred to consume more low- to mid-grade iron ore fines.

Seaborne iron ore cargoes flowing into China remained limited because demand from European mills has apparently improved, a Hong Kong-based trader said, and most iron ore concentrate suppliers were able to sell cargoes at firmer premiums over a 65% Fe index selling into Europe compared with China.

The iron ore fines indices have increased week on week, the same trading source said, so that could have contributed to the slight increase in prices in the high-grade raw materials segment.

The weekly average for Fastmarkets’ index for iron ore 65% Fe Brazil-origin fines, cfr Qingdao, for instance, was at $163.22 per tonne as of Friday June 3, up by $5.14 per tonne or 3.3% from $158.08 per tonne the previous week.

Seaborne iron ore pellet demand has been muted since India introduced the 45% export tariff, and most market buyers in China were unwilling to absorb the increased prices, the Hong Kong-based trader said.

Some trading houses were heard to have landed earlier procured iron ore pellet cargoes, and this might have contributed to the slight increase of iron ore pellet inventory at Chinese ports as of June 2, a Shanghai-based analyst said.

Demand for iron ore pellet, however, was very limited because most mills did not have any sintering restrictions imposed on them, the same analyst said.

Most mills might have turned to domestic suppliers of iron ore pellet and concentrate as an alternative source to avoid paying higher prices, the Shanghai-based analyst added, which then may have contributed to the lack of seaborne activity.

Vale had announced its latest pellet premiums for the third quarter of 2022 which were settled on top of Fastmarkets’ index for iron ore 65% Fe Brazil-origin fines, cfr Qingdao, with the blast furnace pellet premium set at $88 per tonne, up by $27.40 per tonne from $60.60 per tonne in the second quarter.

Fastmarkets iron ore indices

Quote of the week

The most recent third quarter pellet premium announced by Vale would make landing high-grade iron ore pellet in China extremely difficult. Mills in China will definitely not be able to stomach such a high premium, especially when most are still focused on keeping production costs low
A northern China buyer source told Fastmarkets

Trades/offers/bids heard in the market

Vale, tender, 108,000 tonnes of 63.68% Fe Pellet Feed Fines Guaiba 2, traded at $142.52 per tonne cfr China (62% Fe basis), bill of lading dated May 25.

No visible activity

Norman Fong and Paul Lim in Singapore contributed to this report.

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