A total of 1.839 million mt of iron ore was exchanged hands for the week ended Aug 7, slightly lesser than last week, with Australian fines accounting most of the trades.
BHP’s Yandi fines garnered most of the market share at 25.55%, followed by Pilbara Blend Fines (PBF) at 22.25% and Brazilian Blend fines coming in third at 18.49%.
The week also witnessed iron ore prices reached to one-year high as Platts assessed the 62% Fe Iron Ore Index at $121.40/dry mt CFR North China on Aug 6.
Mills’ dependency on medium grade ores
The high iron ore prices were due to the limited supply of medium grade ores among Chinese port stocks.
Besides, the larger mills prefer to use medium grade ores despite limited supply, as they lacked the flexibility to switch to more cost efficiency blast furnace mix of using high grade ores blending with low grade ores.
However, mills with more flexibility did try to seek for low grade Australian and Indian fines to minimize costs, which may explain the bigger market transaction volumes of Yandi fines during the week.
China’s appetite for steel never end
Going forward, some market participants expect high steel demand in following months as the rainy season came to end in southern regions of China.
Besides, China’s steel demand normally peaked around the September and October period, before declining for winter breaks.
Some economic data also supported high steel demand in China, with record-high iron ore imports in July at 112.65 million mt, up 24% on-year, while the country also became a net importer of steel over Jan-Jul period at 9.9 million mt, up 49.3% on yearly basis.
