A cargo of Jimblebar fines (JMBF) linked to the Argus ICX 62pc index was sold today on online trading platform Globalore, the same day the screen added the option to trade against an average of ICX and Fastmarkets MB62.
The April delivery of 80,000t JMBF traded at a $4.20/dry metric tonne (dmt) discount to the April ICX index average on Globalore, after having been offered at this price. The seller was possibly UK-Australian mining firm BHP. The producer concluded a tender of 90,000t JMBF at a $4.30/dmt discount to the April average of Argus ICX and Mysteel62 index.
Globalore today added the AMB index option of Argus ICX and MB62 for medium-grade fines trades, according to a note sent to members. Corex added the AMB option from 28 February, citing market demand in its announcement.
Today's deals come four months after BHP sold a shipment of its Newman High Grade Fines product against the December average of the Argus ICX, the first time the product had been sold against a different index.
Index optionality and baskets have gained popularity over the past year as Chinese steel mills push for choice and mining firms see value in blended prices over indexes provided by a single provider. The China iron and steel association Cisa in September last year publicly called out major iron ore mining companies to offer a choice of indices to mills in term contract price negotiations.
Seaborne 62pc indexes generally track market levels for UK-Australian mining firm Rio Tinto's PB fines, which for years has been the most liquid seaborne spot material. But Rio Tinto's spot sales slowed in the second half of 2018, increasing BHP's share of spot market trades.
Brazilian mining firm Vale has added to liquidity with its Brazilian blended fines (BRBF), although some of it trades on a floating basis against indexes that do not correlate with the mainstream 62pc price or have an associated derivatives market.
The past year saw widening quality spreads as increasingly profitable Chinese mills chased productivity gains. Medium-grade 60-63.5pc Fe fines priced across a range of more than $15/dmt from lowest to highest in 2018. Argus normalises medium-grade fines trades including BRBF deals to a single index using published value-in-market (ViM) driven brand differentials. This range has narrowed in 2019 as mills' profit margins have been squeezed. Argus ViM normalises BRBF 62pc basis at a $2.05/dmt premium to the ICX, while JMBF 62pc basis normalises at a $6.65/dmt discount.
The ICX had a methodology change in December 2017 and is now published as a volume-weighted average of the day's market activity, with greater weight given to concluded transactions and matched electronic trading platform bid/offer data.
