iron ore slightly down
CIS longs buyers wait for more attractive offers
October 21, 2019
turkish this week
October 21, 2019
iron ore slightly down on output restrictions, higher stocks
China / iron ore
Iron ore inched down on Monday amid additional temporary production cuts in Tangshan city and rising port stockpiles, though the decline was limited by better demand for steel.Australian iron ore fines 62% Fe sagged by $0.5/t to $89/t CFR after the decline of RMB 9.5/t ($1.4/t) in January contracts on the DCE amid expectations for weaker demand this week. Tangshan city authorities ordered local steelmakers to cut sin- tering operations by at least 50% for August 18-21, excluding only three mills that were allowed to continue production using some sintering equipment, according to insiders and local press. The restrictions came on top of those announced previously for the whole August in the city.Besides, iron ore port inventories have been increasing for more than a month on the back of recovering shipments from Brazil and Australia, adding 0.65 million t to
123.15 million t last week, Steel home data showed.At the same time, short term prospects for the iron ore market gained some op- timism as the traditionally high season in the finished steel sector is approaching. traders boosted purchases before construction season, which resulted in a 2% decrease in steelmakers’ inventories last week.Seaborne trading activity softened compared to Friday but remained sufficient in general. Buyers gave preference to high-grade Brazilian material during the day. At the same time, port trading was weak, with most suppliers keeping offers stable.
ChiNA: deAl PriCeS fOr irON Ore, $/T
| Products | fe, % | Sale method | Volume, t | Shipment | Price, Cfr Qingdao | Price, fOB |
| Carajas fines, Brazil | 65 | globalore | 80,000 | August 5 | 97.2 | 74.6 |
| Carajas fines, Brazil | 65 | globalore | 80,000 | July 29 | 97 | 74.4 |
| BRBF fines, Brazil | 62 | CorEX | 170,000 | September 7-16* | unfixed | – |
| * – laycan
|
China books Iranian billet again on high local prices
China / Steel Semis
China returned to billet import in mid-September, as the domestic prices were at a relatively high level. At least 245,000 t was booked from Iran during the week.The first deal was concluded on Monday for 45,000 t of billet at $395/t CFR for late October shipment. It was around $25/t below domestic quotes (RMB 3,400/t or 480/t), taking into account 13% VAT and 2% import tax. “It is quite a good price, for now,” a major Chinese trader told Metal Expert. However, “it is still risky, since the local price may further fall in China,” he added.Another top Chinese trader purchased 200,000 t of Iranian semis this week. The contract price has not been disclosed by the time of publication, but it should be significantly lower than the previous one, market sources estimate. “It should be around $385/t CFR, which is the level of bids from Thailand,” a trading source in Eastern China said.It is highly possible that more bookings of big lots will be placed at Iranian mills in the near future, as the gap between Chinese and Iranian prices is quite wide and delivery time is not too long. Chinese importers purchased around 650,000 t of Iranian semis during the previous wave of import in June.
Iron ore demand surges again on lower price
China / Iron Ore
The price plunge in the iron ore market slowed down on Friday amid a robust demand increase ahead of slower trading activity during the holiday period.Australian iron ore fines 62% Fe inched down by $0.5/t to $91.5/t CFR, while the futures on the dCE also showed a slight daily decrease of RMB 2.5/t ($0.4/t). A weaker steel price continued to affect the raw material, with Tangshan billet losing RMB 30/t ($4.2/t) due to expectations of lenient winter output cuts in China, since the government will allow the steelmaking cities to decide their restrictions for the period.However, the price drop was much less on Friday com- pared to the previous working day due to a significant trading pickup caused by lower prices. Chinese custom- ers booked 830,000 t of high-grade Australian and Brazilian ore on platforms in total.Purchasing activity at ports improved as well after trad- ers cut offers by RMB 5-15/t ($0.7-2.1/t).Insider forecasts for the near future are cautiously optimistic. “Easy output restrictions mean sufficient demand for iron ore in the medium term,” a market source commented.
ChINa: DealS fOR IRON ORE, $/t
| Products | fe, % | Sale method | Volume, t | laycan | Price, CfR Qingdao |
| Pilbara fines, Australia | 62 | globalOre | 190,000 | October 25 – November 3 | unfixed |
| Pilbara fines, Australia | 62 | globalOre | 170,000 | October 25 – November 3 | unfixed |
| Carajas fines, Brazil | 65 | COREX | 190,000 | October 29 – November 7 | unfixed |
| Carajas fines, Brazil | 65 | COREX | 190,000 | November 28 – december 7 | unfixed |
| Carajas fines, Brazil | 65 | COREX | 90,000 | September 28 – October 7 | unfixed |
Chinese steel production to stay high in winter on easy restrictions
China / flat Products, long products
China’s central government has released a draft plan on winter output curbs, al- lowing the cities to set their own restrictions depending on weather conditions and emission level, as a year before. Based on the news, insiders believe the effect on steel output to be minimal.There was no official announcement on the production cuts for the heating period yet, but the preliminary plan reads that they will be not the same for 28 key steel- making cities, which will decide by themselves how to meet the emission target set for the period. Steel mills will be divided by three categories (A, B, C), with ultra-low emission level producers belonging to group A and permitted to run at full capacity. About 100 million t of steelmaking equipment in Hebei province and 15 million t in Shanxi province are predicted to meet ultra-low emission target, according to the plan.Since the announcement did not specify how serious the cut will be, it is difficult for market participants to estimate the impact on steel output in winter. “Steel production is on the rise despite stricter or easier output cuts, and I do not believe the situation will change this year,” a source told Metal Expert. At the same time, China’s government said on Friday that the emission target will be stricter for the cities that failed to meet it last winter.The news that restrictions will be quite lenient during the heating period partially affected the steel prices due to expected ample supply, with Tangshan billet losing RMB 60/t ($8.5/t) in the last two days.
Baowu Steel group capacity to reach 90 million tpy after merger with Ma steel
China / flat Products, long products
China’s largest steelmaker Baowu Steel Group merged with another major Chinese producer Ma’anshan Iron and Steel (MA steel) on Thursday.According to the agreement, a 51% stake in MA steel will be held by Baowu Steel Group. Thus, the capacity of the world’s second largest steelmaker will be expanded from 70 million tpy to 90 million tpy this year.Baosteel became Baowu after merging Wuhan Iron and Steel in 2016. This year “Baosteel will change the name again and will continue M&A process after adding ’Ma’,” the company representative told Metal Expert. Baowu Steel Group has an ambitious plan to achieve at least 100 million tpy capacity and become the biggest steelmaker globally, hitting its main rival Arcelor Mittal. After reaching this goal, “our second step will be to achieve RMB 1 trillion revenue annually,” the company official told Metal Expert.
