Price Spread Between High and Medium-Grade Imported Iron Ores Shrank Significantly In April, That between Medium and Low-Grade Ore Widened

In April, the price spread between high and medium-grade imported iron ores narrowed significantly and that between the medium and low-grade ores expanded slightly. Since early April, accumulated steel inventories amid weakening demand have lowered the profits of steel mills. In order to reduce costs, steel mills have reduced the proportion of high-grade ore used while favouring medium- and low-grade ore. This, combined with a slight increase in the supply of domestic ore, weakened the demand for high-grade IOCJ.

Although some steel mills have increased the use of Indian fines which has driven up the demand for IOCJ to a certain extent, most steel mills still used mainstream FMG-SSF or blend fines, limiting the growth of the demand for Indian fines. In addition, in April, FMG’s discounts on SSF and blend fines shrank further, leaving the medium-grade fines most cost efficient. This improved its demand and bolstered its prices. As a result, the price difference between high and medium-grade ore narrowed, while that between medium and low-grade ore widened. As of the end of April, the price difference between high and medium-grade ore narrowed by 18 yuan to 86 yuan/mt, and that between medium and low-grade products expanded by 4 yuan/mt to 136 yuan/mt.

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