Iron ore producers Vale and Rio Tinto have expanded their operations to China's Ningbo Zhoushan port, at a time when seaborne prices for the companies' mainstream products remain firm on robust buying appetite and uncertainty over supply.
Vale opened its 3mn t/yr Shulanghu Ore Grinding Centre at the port, in China's eastern Zhejiang province, on 25 August.
This is Vale's first grinding centre in China. Three production lines will produce its new GF88 brand, produced by grinding 65pc Fe Carajas (IOCJ) fines.
The Argus ICX 65pc index rose by $4.40/dry metric tonne (dmt) to $135.05/dmt cfr Qingdao yesterday, a day after the opening ceremony. The diversion of IOCJ to the pellet feed blend could tighten IOCJ supply in the spot market, participants said.
"As a high-quality raw material for pelletising, this product can help steel mills to reduce blast furnace emissions and reduce production costs. Even the amount of GF88 is not that large at the first stage, but it is another new experiment," a manager from a state-owned trading firm said.
Vale said last year that it expects to produce 30mn t/yr of GF88 in the medium term. The blend will absorb growing supply of IOCJ from Vale's northern system in Brazil, which will reach 260mn t/yr capacity in 2024 after a recently-approved 20mn t expansion of the S11D mine.
Co-operation between Vale and the port began in 2016 with the blending of 63pc Fe Brazilian blended fines (BRBF), a blend of its northern and southern system fines.
RTBF expansion
Rio Tinto launched ore blending and portside spot sales at Ningbo Zhoushan port on 25 August.
The new facility expands Rio Tinto's first port blending and spot sales into south China and the Yangtze river delta region from ports in north and east China.
The Rio Tinto Blend Fines (RTBF) product will be blended from SP10 fines and Canadian concentrate at Beilun port. The two products have low liquidity in China's markets.
"The specification of RTBF looks good, but it will take time to see whether mills accept it or not. A mill in the Yangtze river delta was heard have taken a cargo of RTBF for trial use, but the feedback remains to be seen," an east China-based mill buyer said.
The co-operation between Rio Tinto, Vale and the port is expected to reduce shipping costs and cut mills' purchasing cycle and costs, market participants said.
