NewsMarket Commentary : Seaborne iron ore prices drop as demand softens - YGL Ibay

October 14, 20200
  • Portside prices drop on restrained buying
  • Sintering controls may benefit pellet over lump
 
Expectations of a seasonal downturn in end-user demand weighed on seaborne iron ore prices Oct. 13.  
S&P Global Platts assessed the 62% Fe Iron Ore Index at $121.35/dry mt CFR North China on Oct. 13, down $2.50/dmt from Oct. 12.  
The front-month November 62% Fe derivative was down $2.75/dmt from Oct. 12 at $116.85/dmt on Oct. 13.  
There was reselling pressure for seaborne cargoes as the recent price rebound discouraged procurement interests, according to traders.  
“Margins have not turned negative to trigger production reduction. Steel finished products will continue to accumulate and weigh on steel prices when construction activities slow in the winter season, especially in northern China,” a China-based trader said.  
Meanwhile, forward cargoes were still valued at high premiums though the backwardation structure might steepen if end-user demand starts to weaken, a China-based procurement source said.  
A strip tender for six cargoes of Pilbara Blend Fines loading in November 2020 to April 2021, with three seller options, was heard to have been concluded at a premium of about $3.10/dmt CFR China over the loading month Platts IODEX.  
Port stock prices weakened further amid inventory accumulation expected in the last quarter. “The structural deficit of fines across low to high grades will finally be relieved,” said a China-based trader.  
Platts 62% Fe iron ore port stock index, or IOPEX North China, was assessed at Yuan 920/wmt FOT Oct. 13, down Yuan 10/wmt from Oct. 12, or at $128.01/dmt on an import-parity basis.  
IOPEX East China was assessed at Yuan 914/wmt FOT Oct. 13, down Yuan 11/wmt from Oct. 12, or at $127.23/dmt on an import-parity basis.  
Steelmakers were heard stocking sintered ores or imported pellet in anticipation of a short-term tightening of sintering controls in case of poor environmental conditions, a trader source said.  
“Pellet would be on top of the procurement list due to its higher quality and lower coking cost required. If sintering control tightens further, lump demand may fall behind,” the source added.  
Platts assessed the spot lump premium at 7.8 cents/dmtu on Oct. 13, stable from Oct. 12.
 
By Yuchen Huo ,Jun Kai Heng
Published on – Tue, 13 Oct 2020 19:38:25 CST

 

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