ASIA IRON ORE: Spot prices hit 6-month high on tight supply, stronger steel
Singapore (Platts)--26Dec2012/604 am EST/1104 GMT
Spot prices of seaborne iron ore gained Wednesday, lifted by persistent
supply tightness and steel prices that rose on speculation about China's
Platts assessed the 62%-Fe Iron Ore Index $2.50/dry mt higher at
$139.75/dmt CFR North China, the highest since June 22.
Sentiment in the iron ore market was buoyed by stronger steel prices,
which in turn gained on speculation that China's new urbanization initiative
would spur building and infrastructure projects, local media reports said.
The spot price of square billet in Tangshan jumped Yuan 110/mt from
Tuesday to Yuan 3,300/mt ($524.50/mt) ex-stock, according to a Hebei-based
mill source. Meanwhile, Yanshan Steel awarded its closely watched weekly
billet tender at Yuan 3,290/mt ex-works, a Yuan 77/mt increase from last
Wednesday, a company source said.
"Stronger billet prices are lending support to already bullish sentiment
for iron ore," said a Singapore-based trader.
Rebar futures in Shanghai also gained, as the most active May contract
last traded Yuan 5/mt higher at Yuan 3,878/mt, and settled at Yuan 3,872/mt,
a Yuan 26/mt increase on the day.
Of the trades concluded in the iron ore market, a 110,000 mt cargo
classified under the 62%-Fe Australian fines bracket on the GlobalOre
platform was sold by BHP Billiton at $139.50/dmt CFR China arriving in
Some market participants said the cargo to be delivered would be 61%-Fe
Mining Area C fines, while others said it would be 62.7%-Fe Newman fines. As
buyers weren't clear at the point of bidding what the offered brand was, the
trade couldn't be considered for assessment purposes.
Separately, BHP sold 100,000 mt of 58%-Fe Australian fines at
$127.25/dmt CFR Qingdao on the China Beijing International Mining Exchange
platform, loading January 21-30.
PORT STOCKS LOWER
Falling iron ore inventories at Chinese ports, a result of mills'
reluctance to restock on imports when prices were at their depths over the
past few months, also contributed to supporting iron ore prices, market
Iron ore stocks have fallen to about 72 million mt, industry sources
said, citing recent analyst reports.
61%-Fe Australian Pilbara Blend fines at northern Chinese ports were
offered at a range of Yuan 950-1,000/wet mt free-on-truck (including Yuan
35/wmt and 17% value-added tax), compared with Yuan 950-960/wmt Monday, as
some traders raised offers. Today's offers were equivalent to
$133.06-140.35/dmt on an import parity basis.
The repeatable trading level, however, was pegged at just Yuan 950/wmt.
Many mills, faced with lower ore stock levels, are operating at high
production rates, forcing prices higher, trading sources said.
"I've been searching for a Capesize cargo of PB fines this morning, but
no one has been willing to give me an offer," said a source at a Jiangsu-based
steelmaker. "Sellers are holding on to cargoes so they sell at better prices."
RADIANT OFFERS INDIAN FINES
Separately, Radiant World offered three cargoes of medium-grade fines on
the spot market Monday, according to a source who received the offers.
The Mumbai-based trader offered a 80,000 mt shipment of 60/60%-Fe fines
that departed from Visakhapatnam December 18. The voyage from India's east
coast to northern China takes about 15 days, translating into an estimated
arrival date of January 2.
It also offered two cargoes of 61/61%-Fe fines in the forms of a 60,000
mt shipment loading from Haldia and Visakhapatnam January 5-15, and a 75,000
mt parcel loading from Haldia and Mundra January 10-20, the source said.
Radiant's cargoes were likely from the state of Chhattisgarh, which so
far has been unscathed from government-imposed restrictions on mining. But it
is one of seven states due for investigation by a committee led by former
Supreme Court judge M.B. Shah.
It wasn't clear whether the cargoes have been sold, and Radiant wasn't
immediately available for comment when reached Wednesday.
--Keith Tan, email@example.com
--Melvin Yeo, firstname.lastname@example.org
--Edited by John Kingston, email@example.com