Singapore (Platts)--13Dec2012/837 am EST/1337 GMT
Australian mining giant BHP Billiton clinched a spot iron ore lump premium of $0.15/dry mt unit over Platts 62% Fe IODEX assessments for a 62.4%-Fe Australian Mining Area C lump cargo, a source with knowledge on the matter told Platts Thursday. The miner managed to obtain a premium that was $0.02/dmtu higher than when it last sold MAC lump Monday at $0.13/dmtu, selling an 80,000 mt shipment on Thursday to an international trader that will load in the first half of January. The MAC lump cargo that was sold Monday was purchased by a mill, the source said. "Lump demand is pretty strong now due to a combination of supply and demand factors," the source said. "Low production of domestic pellet material in China during the wintertime has a lot to do with pushing up demand for lump cargoes." Lump and pellet cargoes are mutual substitutes, with the latter processed in a plant from concentrate material. "There is a shortage of higher grade lump cargoes in the spot market now, so there will be end-users willing to pay higher prices for them," a Shanghai-based trader said. Article continues below...Request a free trial of: Platts SBB Steel Markets DailyPlatts SBB Steel Markets Daily provides transparent daily and weekly assessments of iron ore, coking coal, coke, ferrous scrap and ferroalloys prices, plus insightful analysis and commentary on the day's market activities.
Australian mining giant BHP Billiton clinched a spot iron ore lump premium of $0.15/dry mt unit over Platts 62% Fe IODEX assessments for a 62.4%-Fe Australian Mining Area C lump cargo, a source with knowledge on the matter told Platts Thursday. The miner managed to obtain a premium that was $0.02/dmtu higher than when it last sold MAC lump Monday at $0.13/dmtu, selling an 80,000 mt shipment on Thursday to an international trader that will load in the first half of January. The MAC lump cargo that was sold Monday was purchased by a mill, the source said. "Lump demand is pretty strong now due to a combination of supply and demand factors," the source said. "Low production of domestic pellet material in China during the wintertime has a lot to do with pushing up demand for lump cargoes." Lump and pellet cargoes are mutual substitutes, with the latter processed in a plant from concentrate material. "There is a shortage of higher grade lump cargoes in the spot market now, so there will be end-users willing to pay higher prices for them," a Shanghai-based trader said.
Article continues below...
Platts SBB Steel Markets Daily provides transparent daily and weekly assessments of iron ore, coking coal, coke, ferrous scrap and ferroalloys prices, plus insightful analysis and commentary on the day's market activities.
A Shandong-based mill source added that both traders and mills were reacting to the supply tightness of lump cargoes. BHP Billiton's spot lump premiums substantially higher than the fourth quarter lump premiums that it was heard to have reached with its long-term contractual customers. A source close to the matter told Platts September 26 that BHP Billiton had discussed lump premiums for October-December "in the range of $0.06-0.07/dmtu" with its customers. But a Beijing-based source at a major mill said BHP Billiton's Q4 lump premiums were between $0.055 and $0.06/dmtu. The miner does not fix a standard quarterly lump premium with customers, adopting instead a more flexible method of negotiations with contractual customers. For some customers, a quarterly lump premium price is applicable while for others, a monthly lump premium price is set.--Celestyn Wong, celestyn_wong@platts.com--Edited by Jonathan Dart, jonathan_dart@platts.com
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