IRON ORE MARKET: Iron ore prices continue to hit new record high; IODEX gains 4.9%

 Singapore—Seaborne iron ore prices continued to break records on the back of heated demand and surging prices at Chinese ports.

S&P Global Platts assessed the 62% Fe Iron Ore Index at $212.75/ dry mt CFR North China on May 7, up $10.1/dmt from May 6.

Market sources saw increased seaborne interests for mainstream medium grade fines amid growing consumption of ores with higher than 60% Fe among Chinese steelmakers.

Rio Tinto sold a 170,000 mt cargo of Pilbara Blend Fines (PBF) at a premium of $6.15/dmt over June average of IODEX CFR China on 62% Fe basis, on globalORE, for loading over June 3-12. Vale sold a 170,000 mt cargo of Brazilian Blend Fines (BRBF) at $214.2/dmt CFR China on 62% Fe basis, on COREX, for loading over June 1-10.

“Steel prices kept breaking records and margins remained high, mills will continue to decrease low-grade fines usage and rely heavily on fines with relatively higher Fe including PB, BRBF and IOCJ,” an end-user source based in Northern China said, “It is seaborne prices that’s lagging behind RMB prices today.” 

Port stock prices were rising throughout the day with the 61.5% Fe PBF trading around Yuan 1,390/wmt FOT Rizhao in the morning before surging to Yuan 1,450/wmt FOT Qingdao in the afternoon, on the back of tightening supply of Australian mainstream fines.

Despite the Labor Day holidays when port stock transactions came to a halt between May 1-5, inventories at major ports dropped on the week, market sources said.

“Our trading volume in the port stock market today is at least three times as high as normal days,” said a port stock trader, pointing to heated restocking demand among mills.

Platts 62% Fe iron ore port stock index, IOPEX North China, was assessed at Yuan 1,455/wmt FOT May 7, up Yuan 81/wmt from May 6, or at $212.69/dmt on an import parity basis. IOPEX East China, was assessed at Yuan 1,480/wmt FOT May 7, up Yuan 81/wmt from May 6, or at $216.52/dmt on an import parity basis.

To improve the production efficiency of pig iron, there is a preference to increase the Fe level of sinter over increasing direct feed usage among steelmakers. Lump transactions at quayside side were heard scant despite the high liquidity of fines transactions.

Platts assessed the spot lump premium at 55 cents/dry mt unit on May 7, down 0.5 cent/dmtu from May 6.

Domestic concentrate prices in Hebei increased on the week on firm demand but lagged behind the increase of fines prices due to the same preference on sinter.

Platts assessed the 66% Fe domestic concentrate at Yuan 1,500/dmt on May 7, delivered to mills in Tangshan, up Yuan 50/dmt from April 30.

COKING COAL MARKET : Seaborne met coal delivered prices to China remain steady, outlook positive

Singapore—Asia metallurgical coal delivered prices to China remained steady May 7, taking a brief respite from the uptrend seen in the last trading session.

S&P Global Platts assessed Premium Low Vol steady at $109/mt FOB Australia, while PLV CFR China was flat at $238/mt CFR China May 7.

In China, market continued to see buying interest with traders taking positions as restocking demand was expected from end-users.

In the premium coking coal segment, market saw talks on the availability of spot Canadian Elkview.

“We are waiting to see how this cargo is concluded as it could give market some clarity on price direction in the near term,” a Chinese trader said.

However, some market sources said that as prices of premium coking coal rallied near $240/mt CFR China level, many traders might retreat to the sidelines on concerns of higher risks associated with position taking.

Several steel mills in Southern China said that they were turning to domestic coking coal instead as the current import level became “uncompetitive”.

In the hard coking coal segment, 140,000mt Conuma HCC was concluded May 7 at $200/mt FOB Canada, with June laycan. This was understood to be bounded for the Chinese market.

In the PCI segment, market participants said bullish sentiments also emerged due to limited spot availability of Russian PCI that with nearby loading dates.

40,000 mt of Canadian Brule PCI was concluded May 7 between $120-$121/mt FOB Canada, with June laycan. This was understood to be bounded for the Chinese market.

In the coke segment, major coke producers in Shandong accepted the 5th round of price uptick by Yuan 100/mt May 7, industry sources said. A coke trader said that acceptance by steel mills was “faster-than-expected,” reflecting the strong demand for coke from end-users.

Market participants expected the upward momentum to continue in the near run on the back of healthy steel margins and tight domestic supply of coke.

At Jingtang port, market sources said that sellers adjusted offers higher, mirroring the trend seeing in the domestic and seaborne coking coal markets.

Platts assessed PLV ex-stock Jingtang up Yuan 20/mt to Yuan 1,820/mt on May 7, equivalent to $244.92/mt CFR Jingtang and HCC 64 Mid Vol ex-stock Jingtang was up Yuan 20/mt to Yuan 1,730/mt, equivalent to $232.60/mt CFR Jingtang.

In the ex-China market, market saw indicative offers for premium mid vol edged lower as bearish sentiments creeped regarding Indian demand as the pandemic situation showed no signs of improvement, sources said.