Iron ore concentrate: Demand uptick cuts discounts

Iron ore concentrate floating discounts narrowed further this week on improved demand and tighter supply.

Australian concentrate was assessed at a discount of $1.10/dry metric tonne (dmt) to the September 65pc fines index, up by 50¢/dmt from a week earlier. Ukrainian concentrate was assessed at a discount of $2.50/dmt below the October 65pc fines index, up by 50¢/dmt from a week earlier.

"There are not many concentrate seaborne offers in the market, especially sintering concentrate with silica less than 4-5pc," a Beijing-based trader said.

A September-loading half vessel of Ukrainian concentrate, typically sold in Capesize vessels, traded at a discount of $2.50/dmt to a November 65pc index on 9 September. The discount has narrowed from $3/dmt in a deal on 28 August. A cargo of Canadian concentrate sold flat to a 65pc index late in an unconfirmed deal last week, up from a discount of $1/dmt on 2 September.

"The sharp price rise of pellet has finally increased the demand for concentrate, though still mildly. It is still much easier to sell a half vessel than a whole cargo of Capesize now," a Shanghai-based trader said.

Offer levels also rose. A September-loading cargo of Ukrainian concentrate was offered at a discount of $2/dmt to a November 65pc index today, while an August laycan cargo of the same grade was offered at a discount of $2.50/dmt yesterday.

Domestic concentrate prices in Anhui province rose by Yn20/dmt from last week to Yn1,100/dmt ($160/dmt) ex-factory, with value-added tax included. Further price increases are expected from mills restocking ahead of the 1-8 October National holiday, an Anhui mill source said.

Domestic concentrate continues to hold a cost advantage to imports.

Low-sulphur Ukrainian concentrate traded at Yn965/wet metric tonne (wmt) at Lanqiao port on 9 September, while another cargo with higher 66pc Fe traded at Yn980/wmt at the same port the same day. Ukrainian concentrate traded at Yn985/wmt at Huanghua port on 8 September, and Chilean concentrate with 66.3pc Fe traded at 1040/wmt at Lianyungang port the same day.

Low-sulphur Ukrainian concentrate with 65.65pc Fe was offered at Yn975/wmt at Lianyugang today and with 66.05pc Fe offered at Yn980/wmt at Shandong port yesterday. Minas Rio concentrate with 67.05pc Fe was offered at 1045/wmt at Yangtze river port yesterday.

"Low-sulphur Ukrainian concentrate has a price premium of 15-30 Yuan/wmt above Pilbara Blend Fines (PBF) at Shandong port now, up from a discount of Yn20/wmt late August," a Shandong portside trader said.

Pellet demand improved

Atlantic pellet demand improved with more deals at the port this week. Ukrainian pellet with 65pc Fe traded at Yn1,125/wmt at Rizhao port on 8-9 September. Ukrainian pellet also sold at Yn1,140/wmt at Tianjin port on 9 September.