1H Iron Ore Brands Review

Author Deepali Sharma, Deputy Editor

In this review, Argus underlines the key metrics that defined the performance of six mainstream mid-grade iron ore fines in January-June 2020.

The premiums and discounts associated with mainstream mid-grade iron ore brands are a function of various factors including the available global product mix, Chinese buyers’ sensitivity to gangue materials in their iron ore, portside versus seaborne differentials and steel mills’ productivity requirements based on margins.

Argus calculation of ferrous feed unit costs in China, based on 15pc basic oxygen furnace charge, rose to $271.28/t on 21 July, up by 6.1pc from a month earlier. The cost hit the year’s low on 29 April at $222.07/t. Steel mills’ margins have started coming under pressure and this may turn buyers to lower grade ores as they look to manage costs.

In the PDF, you can view a summary of the key seaborne metrics that defined the performance of mainstream midgrade iron ore brands in the January-June 2020 period.

As we enter H2, Chinese steel mills are heard to be mulling using a combination of high and low-grade ores as a blend to replace some of their mid-grade fines usage with the former turning more cost effective recently amid the persistent strength in mid-grade prices.

Mid-grade Australian iron ore brands saw wider premiums or narrower discounts relative to the front-month SGX swap in July, compared with the first half of this year, as inventories at ports for Mac fines, Newman fines and Pilbara Blend Blend fines remained subdued.

Market sources attributed this to the healthy uptake of such brands at Chinese ports rather than any supply side disruptions. The trend in July marks a continuation of what we saw in January-June 2020.

PBF spot availability spiked in 2Q though portside availability was tight underlining demand (mn t)

PBF spot availability spiked in 2Q though portside availability was tight underlining demand

Please click here for the PDF report