A total of 730,000 mt of iron ores was traded for the week ended Nov 19, as trades slowed down during the off-peak winter season.
The near break even or negative margins were blamed for the low intake of iron ores, as some mills chose to reduce output voluntarily or go for maintenance period during the off-peak season.
During the week, the trades volume of PBF and BRBF accounted the largest market share at 23%, then followed by Carajas fines at 17%.
Shrinking mills’ profitability to hurt output
Buyers preferred to purchase on fixed price basis, as the negative import margins for PBF had deterred procurement among traders and buyers.
Moreover, Platts estimated Chinese steel mills margins at negative $9.08/mt and $10.88/mt for rebar and HRC respectively as of Nov 17. These provided little incentives for mills to produce more flat steel and long steel products.
Due to negative margins, mills drove up the demand for discounted medium grade fines like Mac fines and low-grade fines, while the demand for high grade fines had diminished.
No end at sight for lump premium slumps
Lump demand also took a hit from the thin steel margins, due to limited lump usage ratio in blast furnace mix.
However, the low lump portside stocks may provide some supports for northern China market, while there were little interests for other alternatives like pellets.
As many end-users deemed pellets as not being cost-efficient, though it was heard that some Chinese mills are willing to import Indian pellets if pellet supply continued to decline further.
