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WEEKLY IRON ORE WRAP: Prices crawling back after 14-month low

Friday, 01 October 2021

Seaborne iron ore market continued to crawl back in the last week of September. Platts 62% Fe IODEX increased by $6.85/dmt on the week to $117/dmt on Oct.1. IODEX has regained momentum of $23/dmt in total in the past two weeks since it fell to a 14-month low of $94/dmt on Sept. 20.

Entering the week ended Oct. 1 seaborne market offers were gradually shifting to November arrival cargoes, which apparently have attracted more buying interest than the October arrival cargoes. Price strengths were seen in Brazilian fines across all grades on the higher iron content and tighter spot supply. Mining Area C Fines (MACF) and Jimblebar Fines (JMBF), the heavily discounted medium-grade fines produced by BHP, have also stepped out of the mire with discounts narrowing by $4-$5/dmt. However, most sources were still cautious about post-holiday demand, as the steel production curbs in Q4 and the impact of power cut in China, to a certain extent, remained uncertain.

A ground collapse accident occurred Sept. 30 in the Australian miner Fortescue Metals Group's Solomon Hub iron ore site in Pilbara. The accident has caused the death of one employee of FMG at site and the company temporarily suspended the operations in Hub. However, the impact on production was heard to be not significant as the operation was expected to resume in a few days and the stock on the loading port should be sufficient to maintain supply. Market sources said the accident would not cause a concern of potential supply shortage of low-grade fines at this stage.

Lump premiums saw a strong rebound during the week on the resurfaced preference from traders and mills after a lengthy market impasse. The spot lump premium closed at 13 cents/dmtu on Oct. 1, up by 10.5 cents/dmtu from Sept. 30.

Four Pilbara Blend lump cargoes loading late October to early November were sold by Rio tinto with a lump premium ranging $0.155-0.16/dmtu CFR China over November average of IODEX. Sources attributed the uptick to the emerging cost-effectiveness of lump cargoes at the moment as compared to pellet products, even though the coke cost was still high. Traders also increased the offering level on a floating basis from a discount of $1-$2/dmt to flat level against front month Platts IODEX and Platts lump premium. The spread between lump and fines on China's portside widened by Yuan 20/wmt before the Chinese 'Golden Week" holiday.

-- Staff

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