The physical iron ore market saw sentiment improve on Tuesday April 25 as steel prices in China rebounded.
Key drivers
Traders of both seaborne iron ore and port materials were heard to have held back on sales or refused to lower their offers as some optimism returned to the spot market following the steel price gains.
China’s rebar and hot rolled coilprices rose 20-90 yuan ($3-13) per tonne during the day.
Trading activity at Chinese ports picked up as mills came out to restock, which sent prices upwards, a mill source in Tangshan said.
But the trading of seaborne iron ore remained thin, with buyers taking their time in the face of an abundance of May shipments.
The Belt and Road Forum for International Cooperation in Beijing scheduled for May 14-15 will likely lead to restrictions being imposed on iron ore sintering operations, according to sources.
Mills located within 100km of Beijing will likely face a complete suspension of production, while those within 200km could see a 50% cap, similar to measures imposed when international events were held in the capital last year, the mill source told Metal Bulletin. These restrictions could last up to half a month.
So far, mills in the affected regions, such as Tangshan, have started stockpiling sintered ore and lumps ahead of time, he added.
This is providing some market opportunities since lumps are not widely available at Tangshan’s ports. Some loss-making HRC producers can also profit by selling their sintered ore, according to the mill source.
Local mills have also been buying more Fortescue Blend fines since last week as its price gap with the lower-grade Super Special fines narrowed to as little as 20 yuan ($3) per tonne from 100 yuan ($15) per tonne in previous months, he added.
Quote of the day
"Another reason for the more positive market sentiment is that the bigger traders are in control of most of the port stocks of the benchmark Pilbara Blend fines. Prices are more likely to go up than down now," a trader in Shandong province pointed out.
Trades
Rio Tinto was heard to have offered 170,000 tonnes of 62% Pilbara Blend fines, laycan May 21-30, at $67.70 per tonne cfr China on Global Ore. It later lowered the offer to $67.25 per tonne cfr before withdrawing it.
Vale offered on the same platform 75,000 tonnes of 65% Fe Iron Ore Carajas, with a bill of lading dated April 7, at $80 per tonne cfr.
BHP Billiton was heard to have offered a joint cargo with a laycan of May 16-25 on the Beijing Iron Ore Trading Center. It comprised 80,000 tonnes of 63% Fe Newman fines priced at the June average of Platts’ 62% Fe index plus a premium of $1.10 per tonne, and 90,000 tonnes of 61.2% Fe Jimblebar fines priced at the June average of TSI’s 62% Fe index with a discount of $1.50 per tonne. A bid was made at index plus a premium of $0.50 per tonne and index plus a discount of $5 per tonne, respectively.
Port prices
Pilbara Blend fines were heard traded at 495-505 yuan per wet tonne at ports in Shandong province and the Tangshan region during the day, compared with 480-500 yuan per wet tonne a day earlier.
The latest range is equivalent to $63-64.30 per tonne cfr China in the seaborne market.
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