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Chinese Demand for Lower Grade Indian Iron Ore Strong as Steel Recovers
Mar 15,2012 10:01CST
industry news
Source:SMM
A rebound in the steel market is boosting demand for low-to-medium grade iron ore in the spot market, lending support to spot prices for lower grades.

BEIJING, Mar. 14 (Platts) -- A rebound in the steel market is boosting demand for low-to-medium grade iron ore in the spot market, lending support to spot prices for lower grades and encouraging more offers in a more actively traded market, sources said Tuesday.

Both Shanghai rebar futures and Tangshan square billet physical prices pushed upward Tuesday.

Indian mining major Sesa Goa was heard to have sold at $108.50/dry mt CFR China Main Port its 90,000 mt cargo of 54%-Fe Indian lump, according to market participants who received the tender. This shipment will load over March 15-20 and contains a maximum of 8% alumina, 7% silica, 0.1% phosphorus, 0.03% sulfur and 9% moisture.

Fellow Indian miner V.M. Salgaocar sold a Panamax cargo of 50/50%-Fe Indian fines at $74.50/dmt FOB Goa to PT Resources. This shipment will load over March 17-23, and contains 8% alumina and 10% silica, a source close to the matter said Tuesday.

Based on freight calculations of $13/wet mt for a Panamax cargo traveling from Goa to North China that the source said was fixed for this cargo, PT Resources paid approximately $87.50/dmt CFR North China.

A Singapore-based trader said he in turn received an offer from PT Resources for the same 50/50%-Fe Indian fines cargo at $94/dmt CFR China Main Port. This would mean PT Resources was re-offering the shipment at $6.50/dmt higher than what it bought the cargo for.

Sources at PT Resources could not be reached for comment.

"Demand for low grades is really firming up, based on the better prices that we're seeing trades being done at. V.M. Salgaocar sold for a pretty high price and if PT Resources is really re offering at $94/dmt CFR, that will really push the market up," a Hong Kong trader said.

Platts assessed the 52% Fe CFR North China price up 75 cents/dmt to $100.75/dmt at the close of Asian business Tuesday.

The trader added that most high grades containing above 60%-Fe are being settled via long-term contracts, so lower grade iron ore is proving to be more popular for spot trading.

Elsewhere in Asia, a Hong Kong trading house sold a 50,000 mt cargo of 55/54%-Fe Indian fines to another trader at $111/dmt CFR China Main Port. This cargo will load over March 20-23, and contains 3.5% alumina, 6% silica, 0.06% phosphorus, 0.08% sulfur and 10% moisture.

Meanwhile, Indian trading company Radiant World has yet to sell the 75,000 mt cargo of 52/52%-Fe Indian fines that it first offered in the spot market late last week due to the "mostly low bids" they had been receiving.

A company source said they would not sell at such low prices because of the recovery of steel margins. Additionally, recent tests for cargo specifications had just come back, affirming the cargo to have 5.47% alumina and 6.31% silica, lower than the average impurity content for 52%-Fe cargoes.

Typical 52%-Fe Indian fines cargoes offered by Sesa Goa contain a maximum of 8% alumina and 9% silica.

The source added that they had just received a bid of $101/dmt CFR Beilun for the 52/52%-Fe fines, the first bidder the company might consider selling to.

However, not all market participants agreed that demand for Indian low-grade iron ore was that strong. A Tangshan-based steelmaking source said: "Indian low-grade fines are overpriced compared with Australian medium-grade cargoes. I'd rather buy the latter based on those prices as you get lower alumina and silica levels."

 

iron ore
Indian ore
steel market

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