SHANGHAI, Sep 14 (SMM) – Pilbara Blend (PB) fines outperformed others in the Chinese iron ore market for the past fortnight as its prices neared prices of Brazilian resources such as Carajas fines and Brazilian Blend Fines (BRBF), SMM research found.
The recent production recovery at steelmakers grew demand and average daily deliveries leaving Jingtang and Caofeidian ports in Tangshan increased for two to three days as a result. Mills also favoured PB fines after its alumina ratio was lowered to 2.2-2.3.
As of Thursday September 6, stocks of PB fines across Qingdao, Rizhao, Jingtang and Caofeidian ports totalled some 7 million mt, down 1.6 million mt or 18.6% from the beginning of August. However, stocks of Brazilian resources across the four ports grew by over 49% from the middle of August. This narrowed the price spreads between PB fines and Brazilian materials.
SMM sees limited, increased shipments from BHP’s Pilbara mine in Western Australia in the second half of the year as it remains on track on meet its targeted output. The mine produced 168.7 million mt of ore in January-June, up 7% from the corresponding period last year. Its annual target is 330-340 million mt.
Vale in Brazil is expected to produce 211.3 million mt of ore in the second half of the year, up over 32 million mt or 18% from the first half of the year, with an estimated annual target of 390 million mt.
SMM expects prices of iron ore to outperform prices of steel products as mills recover output. This is likely to narrow profit margins for mills.
