China portside ore at premium to seaborne in November

Portside iron ore prices were at a premium to seaborne prices in November after trading at a discount for most of this year.

The seaborne equivalent of the Argus PCX price for 62pc portside fines was at a 41¢/dry metric tonne (dmt) premium to the Argus ICX 62pc seaborne fines price. The PCX premium on the ICX price was at $1.20/dmt during the first two days of trading in December.

The PCX discount to the ICX price peaked in August to $4.02/dmt.

The seaborne equivalent of the PCX price is calculated by assuming a 16pc value-added tax and 8pc moisture.

Mills bought lot more cargoes of medium and low-grade ores from the portside market last month than from the seaborne market as a sharp fall in steel profits prompted mills to operate with tighter iron ore stocks and buy smaller volumes from portside markets to tide over immediate needs.

"Off-screen seaborne deals are rare as mills are now preferring to buy from ports rather than book seaborne cargoes, even for low-grade ores. The weak buying interest in seaborne has made traders land more cargoes and sell in portside markets," said a north China-based trader.

"With mills likely to operate with low inventories going forward, I think portside prices may be more stable than seaborne prices in the near term," said a south China-based trader.

Among the major brands tracked by Argus in portside markets, the premium of BRBF fines to the Argus PCX price on a yuan basis fell to 2.35pc in November from 5.26pc in October.

The BRBF premium to the PCX price was at 11.92pc on average in June, the broadest so far this year.

Weaker mill profits in November have sharply reduced demand for medium-grade ores, including BRBF fines.

Qingdao-traded PB fines cargoes were at a discount of 0.8pc to the Argus PCX price, unchanged from October, while Caofeidian-traded PB fines were flat to the PCX price in November from a 2pc premium in October. Newman fines premium to the PCX price was unchanged at 2pc, while the SSF fines discount was unchanged at 38pc.