Seaborne iron ore market inches lower as steel performance threatens demand

2014-09-09

The seaborne iron ore market edged down Monday after negative steel fundamentals placed raw material procurement on the back-burner.

Platts assessed the 62% Fe IODEX at $83.75/dry mt CFR North China, down $0.25/dmt from Friday. “I feel any slight rebound would mark some sparks of brightness before the darkness comes,” a procurement source for a Hebei-based mill said. “Steel sales are doing really badly now and there’s little hope for any improvement through September and October, though these are traditional months for a steel boom.”

In September and October, as the weather cools, productivity in the construction and infrastructure development industries usually experiences a seasonal spike. As these sectors are major consumers of steel, sales typically see a spike during these autumn months.

This negative performance was evidenced by the steel square billet price. Spot prices of billet in Tangshan, a closely watched indicator of steel fundamentals, lost Yuan 40/mt from Friday to finish at Yuan 2,400/mt ($389/mt) ex stock Tangshan, according to a steelmaker in the region.

A trader in Hong Kong added that “unless the Chinese government decides to step in with subsidies and tax cuts, today’s quietness will be tomorrow’s noise”, referring to the difficult challenges hindering any real improvement to downstream steel performance and iron ore buying appetite.

Another trading source in Hong Kong said the “crux” of the matter was steel prices and that was cascading down to negatively impact iron ore demand. “Real estate hasn’t been doing well and steel demand as we can see it, is poor. We also haven’t heard of any new policies coming from the Chinese government that could boost economic growth and confidence, so it’s all up in the air.”

A steelmaker in central China said that market players were all holding back from buying ore as they wanted to see when spot prices would bottom out.

“We need to know clearly when the price bottom will be reached before buying,” the steelmaker said. “But it’s so uncertain when that bottoming out will take place. There are really no clear signals now to suggest when that will be, so we’ll wait.” Australian miner Rio Tinto was offering Pilbara Blend fines at $84.50/dmt CFR Qingdao on a 62%-Fe basis on globalORE, for an 170,000 mt shipment arriving in the first-half of October. The offer was initially at $85/dmt CFR Qingdao before it was lowered.

The counterbid was at $84/dmt CFR Qingdao. An offer for 62%-Fe Australian Newman fines was also present on globalORE at $84.90/dmt CFR Qingdao, for a 90,000 mt shipment arriving September. The counterbid was at $82/dmt CFR Qingdao.

A 62%-Fe Australian MNP fines cargo was heard to have been offered at $84.50/dmt CFR Qingdao on globalORE, for an 170,000 mt shipment arriving September. The counterbid was at $81.90/dmt CFR Qingdao.

Early in the day, a cargo of Australian Yandi fines was heard to have traded at $73.80/dmt CFR Qingdao on a 58%-Fe LAPS (Low Alumina, Phosphorus, Sulfur) basis on globalORE. The 80,000 mt cargo will arrive October.

Platts assessed the 58% Low Al price at $74.25/dmt CFR North China, down $0.75/dmt from Friday, and falling by a larger extent than the higher grades.

Source from : Platts

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