Quiet purchases weigh on shipments of iron ore lump

SHANGHAI, May 16 (SMM) – Shipments of iron ore lump were limited recently, some traders told SMM, as traders held back from purchases on firm premiums on lumps. The significant price spreads between lumps and fines also deterred trades. 

Driven by profits, steel mills have raised the ratio of sinters as well as ore grade into blast furnaces to increase the production of molten iron. This also accounted for the recent, sluggish demand for iron ore lumps. 

In the short term, iron ore lump premiums are likely to stay firm at around $0.18/dmtu, SMM expects.

The 1809 contract on the Dalian Commodity Exchange came off from highs on Wednesday May 16 and closed 0.9% lower, at 482.5 yuan/mt.

In the spot market, traded prices of Pilbara Blend fines were heard at 475 yuan/mt in the Shandong area. Steel mills were keen to purchase in the morning but grew hesitant as prices of futures fell. Some steel mills made smaller purchases, while traders kept offers relatively firm.

Traded spot prices of high grade ore at ports are likely to rise as the price spread between high and low-grade ores widens.

SMM's MMi Iron Ore Port Index stood at 484 yuan/wmt fot Qingdao on Wednesday for 62% Fe fines, up 1.5% from Tuesday May 15.

The index for 58% Fe fines dipped 0.9% to 327 yuan/wmt while the index for 65% Fe fines rose 1.4% to 579 yuan/wmt.

SMM and its new price index business Metals Market Index (MMi) launched the iron ore port indices on May 2 as port prices continued to gain importance in pricing iron ore.

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