Fines 65pc index surge pushes concentrate into negative

Spanish Market: Metals
14/05/20

Iron ore concentrate floating prices have turned negative this week, pressured lower by a rise in the underlying 65pc fines index.

Floating prices for Ukrainian concentrate flipped to a discount of 30¢/dry metric tonne (dmt) below the July Argus 65pc index yesterday from a 30¢/dmt premium a week earlier. Australian concentrate spot premiums fell by 60¢/dmt to $1.20/dmt above the prompt month June Argus 65pc index.

The Argus 65pc index rose by $6.55/dmt, or 6.6pc, to $108.20/dmt over the same 6-13 May period. Heavy rainfall on Brazilian mining firm Vale's northern system have reduced IOCJ supplies, while Covid-19 lockdowns in Brazil have added to restrictions. IOCJ is a main brand in assessing the 65pc index and is used in Vale's 63pc Fe BRBF blended product. Malaysia's lockdown halted Vale's 30mn t/yr Teluk Rubiah iron ore blending terminal, lifting demand for IOCJ to blend in China. Vale resumed spot sales of BRBF from the terminal this week.

"Concentrate premiums are coming down as 65pc index prices edged too high. The shortage of BRBF and IOCJ from Vale have firmly supported medium and high-grade prices," a north China-based trader said.

Off screen, a cargo of Ukrainian concentrate with a May laycan was offered at 50¢/dmt below the 65pc index with quotation period of the month after port departure, nor notice of readiness (NOR)+1. Citic concentrate sold at $3/dmt below the July 65pc index last week.

May-loading Ukrainian concentrate was also offered yesterday flat to the July 65pc index. Koolan concentrate was offered at a $2/dmt premium to the 65pc index.

A cargo of UK-South African mining firm Anglo American's Minas Rio concentrate with a 10 May bill of lading was offered at 50¢/dmt below the June 65pc index.

"Minas-Rio concentrate is not getting much premium, not only because it is a hematite, but also it has limited use in the furnaces," a Beijing-based trader said. Steel mills prefer magnetite concentrates like Karara and Ukrainian concentrate because they can be used in either shaft furnaces or rotary furnaces after pelletised, while hematite can only be used in a rotary furnace, he said. Chinese mills can also use concentrate to increase the quality of sinter feed.

Portside trade:

Ukrainian concentrate sold at 780 yuan/wet metric tonne (wmt) in Rizhao on 12 May
Chilean concentrate sold at 850/wmt at Lianyungang on 12 May
Ukrainian concentrate with 65.86pc Fe was offered at Yn770/wmt at Rizhao on 12 May
High-sulphur 65.23pc Fe Ukrainian concentrate with 0.14pc sulphur was offered at Yn765/wmt at Lianyungang yesterday
Low-sulphur 65.53pc Fe Ukrainian concentrate with 0.02pc sulphur was offered at Yn780/wmt at Rizhao yesterday
Chilean concentrate with 69.08pc Fe was offered at Yn870/wmt at Lianyungang yesterday

By Chris Newman, Kitty Xie and China Staff

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