IRON ORE DAILY: Index for 63% Fe lump premium hits record high

Fastmarkets’ index of the 63% Fe Australia-origin lump ore premium, cfr Qingdao, hit a record-high on Wednesday June 9 amid strong activity on a trading platform.

Fastmarkets iron ore indices
62% Fe fines, cfr Qingdao: $212.67 per tonne, up by $3.17 per tonne
62% Fe low-alumina fines, cfr Qingdao: $214.71 per tonne, up $2.90 per tonne
58% Fe fines high-grade premium, cfr Qingdao: $187.88 per tonne, up by $5.01 per tonne
65% Fe Brazil-origin fines, cfr Qingdao: $242.70 per tonne, up by $2.90 per tonne
62% Fe fines, fot Qingdao: 1,454 yuan per wet metric tonne (implied 62% Fe China Port Price: $212.97 per dry tonne), up by 31 yuan per wmt
63% Fe Australia-origin lump ore premium, cfr Qingdao: $0.7000 per dry metric tonne unit (dmtu), down by $0.1500 per dmtu.

Key drivers
A cargo of Pilbara Blend lump (PBL) was traded on the Globalore platform at a “very strong” lump premium of $0.7000 per dmtu, according to market participants.

A trader in northern China, however, believed that the high lump premium was not surprising because the latest known cargo of PBL sold by the miner was in February, and there was probably some demand for the cargo with sintering restrictions in place in Tangshan up to June 10.
https://www.metalbulletin.com/Article/3993091/Iron-ore/IRON-ORE-DAILY-Seaborne-prices-up-despite-sintering-restrictions-in-Tangshan.html

The buyer was probably not a steel mill because it would make more economic sense for mills to consume iron ore pellets instead, since the lump premium was so high, and most steel mills were said to still have sufficient stocks of iron ore lumps, according to a Hong Kong-based trader.

A Shanghai-based analyst thought that if the buyer were a trading house, then there would be an opportunity to re-sell the cargo at the Chinese ports because iron ore lumps were fetching lump premiums equivalent to around $0.7700-0.8000 per dmtu at Shandong ports.

Seaborne iron ore prices were firmer overall on Wednesday because of increased activity in the physical spot market, sources said.

Meanwhile, buying interest for iron ore at the Chinese ports was heard to be good, and several inquiries had been made, but trading houses were unwilling to lower their offer prices amid the market bullishness, according to traders.

An analyst in Xiamen believed that there was a sense of firm demand from steel mills at Chinese ports over the past two days, and port inventory levels were probably drawn down.

The most-traded September iron ore futures contract on the Dalian Commodity Exchange (DCE) was trending upward gradually during the trading session, ending up by 2.3% from Tuesday’s closing price of 1,149 yuan ($180) per tonne.

The iron ore forward-month swap contracts on the Singapore Exchange (SGX) were largely stable in the morning trading session, but an uptrend developed in the afternoon, and by 6:57pm Singapore time the most-traded July contract was up by $4.31 per tonne compared with Tuesday’s settlement price of $200.69 per tonne.

Quote of the day
“There seems to be short-term firm demand for steel products and that has indirectly lent some support to iron ore. Some mills have been restocking from the Chinese ports, and that seems to be another factor adding to the bullishness in the iron ore market,” the analyst from Xiamen said.

Trades/offers/bids heard in the market
BHP, Globalore, 90,000 tonnes of 58% Fe Yandi fines, traded at the average of two 62% Fe indices plus a discount of $4.40 per tonne, July arrival.

Rio Tinto, Globalore, 70,000 tonnes of 62.5% Fe Pilbara Blend lump, traded at the July average of a 62% Fe index plus a lump premium of $0.7000 per dry metric tonne unit (dmtu), laycan July 2-11.

Fortescue Metals Group, Beijing Iron Ore Trading Center (Corex), 188,000 tonnes of 56.5% Fe Super Special fines, traded at the July average of a 62% Fe index on an fob Australia basis plus a discount of 20%, laycan June 25-July 4.

BHP, Corex, 100,000 tonnes of 60.8% Fe Mining Area C fines, offered at $203 per tonne cfr China, July arrival.

Rio Tinto, Globalore, 100,000 tonnes of 62% Fe Pilbara Blend fines, offered at the July average of a 62% Fe index plus a premium of $8.80 per tonne, laycan July 2-11.

Corex, 70,000 tonnes of 62% Fe Pilbara Blend lump, bid made at the July average of a 62% Fe index plus a lump premium of $0.6700 per dmtu, laycan July 2-11.

Globalore, 70,000 tonnes of 62.5% Fe Pilbara Blend lump, bid made at the July average of a 62% Fe index plus a lump premium of $0.7000 per dmtu, laycan July 2-11.

BHP, tender, 100,000 tonnes of 60.5% Fe Jimblebar fines, laycan July 6-15.

Market participants’ indications for:
Fastmarkets’ index for iron ore 62% Fe fines
Pilbara Blend fines: $207.30-213.10 per tonne cfr China
Brazilian Blend fines: $211.00-215.50 per tonne cfr China
Newman fines: $210.70-212.00 per tonne cfr China
Mac fines: $205.30 per tonne cfr China
Jimblebar fines: $197.30-205.10 per tonne cfr China.

Fastmarkets’ index for iron ore 65% Fe Brazil-origin fines
Iron Ore Carajas: $241.00-244.20 per tonne cfr China.

Port prices
Pilbara Blend fines were traded at 1,435-1,445 yuan per wmt in Shandong province, Tangshan and Tianjin city on Wednesday, compared with 1,400-1,420 yuan per wmt on Tuesday.

The latest range was equivalent to about $210-212 per tonne in the seaborne market.

Dalian Commodity Exchange
The most-traded September iron ore futures contract closed at 1,175 yuan ($184) per tonne on Wednesday, up by 26 yuan per tonne from Tuesday’s closing price.

Zihao Yu in Singapore and Min Li in Shanghai contributed to this article.

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