The Price Difference Between Different Grades Of Imported Iron Ore Expanded In June, But May Shrink In July

SHANGHAI, Jul 6 (SMM) – Iron ore prices rose in June, driven by strong expectations for economic stimulus policies. Frequent mine accidents in Shanxi and Hebei caused some mines to stop production again, which tightened the supply of domestic concentrates and boosted the demand for high-quality concentrates. Tight supply of Brazilian concentrates at domestic ports pushed up the prices of high-grade IOCJ fines. As a result, the price difference between high and medium-grade ore expanded. Steel mills favoured medium and high-grade ore for higher productivity after their profits had improved and finished product stocks had fallen. In this context, the price difference between medium and low-grade ore widened sharply. As of the end of June, the price difference between high and medium-grade ore expanded 4 yuan/mt to 100 yuan/mt, while that between medium and low-grade ore expanded 20 yuan/mt to 142 yuan/mt.

While domestic mines face challenges in raising their concentrate production, the shortages of concentrates may ease in July due to growing shipments by overseas mines since late June, especially from Brazil. In addition, some steel mills have plans for blast furnace maintenance in July, which is the traditional off-season, which will weigh on demand for iron ore. In this context, iron ore prices may move down. Price discounts of both low and medium-grade ore have been raised in July, but the discount of the former is smaller than the latter. SMM expects that the price difference between high and medium-grade ore and that between medium and low-grade ore will both shrink in July.

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