sells first Yuan-priced iron ore deal on COREX Source：MysteelNov...

sells first Yuan-priced iron ore deal on COREX
Source：MysteelNov 22, 2019 18:30See Full-size Table Here
Fortescue Metals Group (FMG), the world’s fourth largest iron ore miner, concluded its first Chinese Yuan-priced iron ore deal on the Beijing-based e-trading platform - Beijing Iron Ore Trading Center Corporation or COREX - on November 21, marking the official and direct trading by another world-class iron ore miner in Yuan-based iron ore to supplement the US dollar-dominated global iron ore market.
On November 21, FMG sold 10,000 tonnes of 57.2% FMG Lumps at the Caofeidian port in Hebei of North China at Yuan 568/wmt, according to COREX’s WeChat sharing late on Thursday.

FMG has been exploring various means of Yuan-priced spot iron ore sales at the Chinese ports in the past couple of years but this has been the first-ever direct trading on an e-trading platform, COREX commented.

Since the first iron ore shipment in May 2008, FMG has sold over 1.3 billion tonnes of iron ore, with the dominant majority to China, a FMG official said.

This was just several days after the Dalian-headquartered Dalian Commodity Exchange (DCE) announced on November 14 that Vale, the world’s top iron ore miner, sold one shipment of Chinese Yuan-priced Brazilian Blend Fines (BRBF) to Shandong Yongfeng International Trade Co, the first time ever for Vale to adopt the pricing formula of the DCE iron ore May 2020 contract plus a premium/discount with the delivery port as Qingdao in East China’s Shandong province, according to the exchange.

Since 2015, Vale has commenced iron ore blending and some Yuan-priced spot iron ore sales at the Chinese ports, and in 2018, Vale sold 18 million tonnes of iron ore in Chinese Yuan, but the November deal was the first based on DCE iron ore futures price, Mysteel Global understands.

“This (Chinese Yuan-priced iron ore) is mutually beneficial, as the Chinese steel mills would like to have the options to buy the imported iron ore in its own currency and in various volumes other than a whole vessel size, while FMG and Vale, by doing so, will better cater to their core customers’ needs and to safeguard their market shares,” a Beijing-based iron ore trader commented.

BHP and Rio Tinto, the other top two iron ore miners have also been into Yuan-priced iron ore spot sales, with Rio Tinto selling its first Yuan-priced deal, 10,000 tonnes of medium-grade SP10 fines, a non- mainstream product to Hebei Gaoyi Steel on October 11 with the delivery port at Rizhao of Shandong, as reported.

China’s steel industry, as the world’s largest iron ore importer and consumer, has been exploring ways to enhance its bargaining power and to minimize its exposure to pricing risks during volatile period via various means such as iron ore derivatives and consuming more iron ore port inventories, the Beijing-based analyst said.

All the latest adjustments of sales strategies from the core miners are indications of their fully acknowledging the significance of Chinese market to them in the foreseeable future, he added.

China’s iron ore imports peaked in 2018, with the volume easing 1% on year to 1.06 billion tonnes, and over January-October, China imported 877 million tonnes, down 1.6% on year.

Written by Victoria Zou, [email protected], and Hongmei Li, [email protected]