Strong fundamentals preserve momentum for seaborne iron ore concentrate, pellets

Fastmarkets iron ore indices
66% Fe concentrate, cfr Qingdao: $193.34 per tonne, up $7.48 per tonne.
65% Fe blast furnace pellet, cfr Qingdao: $229.28 per tonne, up $11.24 per tonne.

Key drivers
Prices for iron ore concentrate surged on strong demand and gains recorded for 65% Fe iron ore swaps, sources said.

A trading source in Singapore said that cargoes of iron ore concentrate, which are typically priced against 65% Fe indices, were mostly flipping from carrying discounts to premiums.

Demand for high-grade iron ore is high now while supply is limited, which push up prices further, he added.

A buyer source in southern China concurred, saying restrictions to lower emission in the Tangshan region - the country’s steelmaking hub - boosted demand for concentrate, which is advantageous in that it has a high Fe content and low impurities.

The stronger demand for high-grade iron ore in general had resulted in gains for 65% Fe swaps, which had the effect of lifting prices for concentrate, he said.

Fastmarkets’ iron ore index for 65% Fe Brazil-origin fines, cfr Qingdao averaged $193.60 per tonne in the week, up by $6.88 per tonne compared with a week earlier.

A second buyer source in southern China drew attention to a drop in the supply of domestic concentrate in China due to the cold winter weather. This contributed to the price surges in both the seaborne market as well as at Chinese ports, he told Fastmarkets.

In particular, prices for concentrate at the ports are now significantly higher than those for Carajas fines - which are typically 65% Fe - but buyers are still actively buying the former, he added.

Supply woes have also driven up prices for pellets, sources said.

Indian pellet suppliers are not willing to entertain overseas buyers who bid below $200 per tonne fob India because the domestic market in the South Asian country is very strong now, the trading source in Singapore said.

A trading source in southern China told Fastmarkets that the traded price for Indian KIOCL pellet had risen to $208 per tonne on fob India - equivalent to more than $220 per tonne cfr China. Such a high price could dampen interest among Chinese buyers.

Quote of the week
“High prices for [metallurgical] coke have pushed mills to seek out higher Fe iron ore to reduce their coke consumption. Considering the high prices for pellets, concentrate is a good choice to increase the overall Fe content for blast furnace feeds. This has been a reason behind the strong demand for concentrate,” the trading source in southern China said.

Trades/offers/bids heard in the market
Concentrate
Spot market, a cargo of 67.97% Fe Russian concentrate, offered at the average of a 65% Fe index and its value-in-use for the month of the notice of readiness (NOR) at the port of discharge, plus a premium of $7 per tonne, late January arrival.

Spot market, 7,000 tonnes of 64.7% Fe Philippine concentrate, traded at the average of a 62% Fe index for the period within five business days before and after the NOR at the port of discharge, adjusted for Fe content, plus a discount of $9 per tonne, laycan February.

Spot market, a cargo of 65% Fe Karara concentrate, traded at the January average of a 65% Fe index plus a discount of $1.50 per tonne, January arrival.

Spot market, a cargo of 65% Fe low-sulfur Ukrainian concentrate, traded at the average of a 65% Fe index for the month of the NOR at the port of discharge, plus a premium of $0.00-0.50 per tonne, laycan January.

Pellet
Spot market, 50,000 tonnes of 64% Fe KIOCL pellets, traded at $208 per tonne fob India, February arrival.

Spot market, 55,000 tonnes of 63% Fe Rashmi pellets, traded at $204.5 per tonne cfr China, February arrival.

Spot market, a cargo of 64% Fe Rashmi pellets, offered at $208 per tonne cfr China, February arrival.

Vale, tender, 40,000-75,000 tonnes of either 64.50% Fe AF70 Sao Luis Blast Furnace pellet or 65.30% Fe AF73 Sao Luis Blast Furnace Acid pellet, February loading.