Iron ore concentrate, pellets prices stable at highs
Prices for seaborne iron ore concentrate and pellets inched up in the week to Friday November 27 amid increased demand for concentrate and tightened supply of pellets, market sources told Fastmarkets.
Fastmarkets iron ore indices
66% Fe concentrate, cfr Qingdao: $138.07 per tonne, up $0.68 per tonne.
65% Fe blast furnace pellet, cfr Qingdao: $158.77 per tonne, up $0.81 per tonne.
Market sources said demand for iron ore concentrate has continued to recover this past week.
A trading source in southern China said prices for iron ore concentrate in the seaborne market and at ports were gradually increasing, implying solid demand for the material because of its advantage in having reduced emissions and higher efficiency in steel production.
But the high price for coke limited buyers’ preference for concentrate, sources told Fastmarkets.
A buyer source in northern China said there was Ukrainian concentrate cargo offered at a competitive discount, but it carried a high-silica content which deterred the mill from purchasing the cargo.
Using high-silica materials would increase the amount of coke needed in the blast furnace, which was not ideal for cost efficiency now due to the elevated prices for coke, the buyer source added.
The most-traded January contract of coke futures in Dalian Commodity Exchange closed at 2,449.50 yuan ($372) per tonne on November 27, up by 11.6% compared with the opening price of 2,195 yuan per tonne on November 2, the first trading day of November.
Trading houses shared a similar aversion to high-silica material.
A trading source in Shanghai said the high prices for coke since mid-October due to China’s ban on importing Australian coal had made all participants sensitive to impurity of the iron ore.
The large discount offered on the high-silica concentrate would be offset by more consumption in coke, as a result it was actually less attractive to mills, and trading houses were not interested in it due to a poor expected profitability either to resell in seaborne market or trade at ports, the trader source added.
On the pellet side, sources said the imbalance between supply and demand was dominating the market.
A trading source in Hong Kong said iron ore pellets had been a rare sight in the seaborne market this past week and no cargoes were offered by Indian suppliers to China, where demand remained strong.
Inventories of pellet at Chinese ports decreased again week on week and Brazilian and Indian pellet were both sold at elevated levels of 1,100-1,200 yuan per tonne at ports in China, so pellet prices are widely expected to increase under the extremely tight supply conditions, the trading source in southern China said.
Quote of the week
“Besides the bullish fundamentals for concentrate and pellet, the strong demand for steel also supports overall iron ore prices. Previously, people had been concerned that the cold weather during winter would affect the demand for steel from the construction sector, but the reality this past week has shown the opposite, and we expect the strong demand in the steel sector to continue supporting iron ore prices in December,” a buyer source in southern China said.
Trades/offers/bids heard in the market
Spot market, a cargo of low-sulfur content 65% Fe Ukrainian concentrate, offered at the average of a 65% Fe index for the month after the notice of readiness (NOR) at the port of discharge, plus a discount of $1.50 per tonne, late-December arrival.
Spot market, 100,000 tonnes of high-silica content 65.5% Fe Ukrainian concentrate, offered at the average of a 65% Fe index for the month after the NOR at the port of discharge, plus a discount of $2.50 per tonne, late-December laycan.
Spot market, a cargo of 65.9% Fe Canadian concentrate, offered at the average of Fastmarkets’ index for iron ore 65% Fe Brazil-origin fines, cfr Qingdao for the month after the NOR at the port of discharge, adjusted for Fe content, plus a premium of $1 per tonne, January arrival.
No market activity.
Alex Theo in Singapore contributed to this article.