Asian iron ore buyers re -consider the options in Q3 when the Pilbara Utama brand has declined
This report is part of the S&P Global Commodity Insights’ Metals Trade Review Series, where we dig dataset and digest some of the main trends in iron ore, metallurgical coal, copper, alumina, cobalt, lithium, nickel and steel and memo. We also explore what can be brought in the next few months, from the offer and demand shifted to the new arbitration and fluctuations in the spread of quality.
The iron ore market in the Asian Sea is expected to see a sustainable reward for buyers in the third quarter, because the price of spots floated near the lowest nine months $ 92.75/DMT and degradation
The platts ore, or Iodex, the average $ 97.76/DMT CFR North China in Q2, down 5.67% of Q1 and 12.57% of Q2 2024. Platts are part of the S&P Global Commodity Insights.
Analysts at Commodity Insights estimate IODEX at $ 98.40/DMT for Q3 and $ 99.18/DMT for a full year 2025.
“We hope that the price of iron ore experiences a little more pressure over the remaining year, because Chinese steel production is usually lower in the second half of this year, while at the same time, exports of strong iron ore,” said Paul Bartholomew, a senior metal and mining analyst at commodity insight, said.
Market participants faced uncertainty after Rio Tinto announced the revised specifications for its flagship Pilbara mixed fine for Q3, set at 60.8% Fe, 2.5% alumina, 4.3% silica and 0.11% phosphorus.
With the first cargo from the new PBF published in early July, Chinese steel makers said they would monitor brand performance carefully, because end users could not combine, sinter or test products updated on their stoves until the earliest August.
The first cargo from the new PBF was issued at the Port of North China at the end of July, with iron content in the range of 60.6% -61.6%, according to data collected by platts.
While some buyers welcomed the first cargo from the new PBF, with iron content reaching more than 61%, others said they would monitor quality consistency in the coming months.
“I don’t mind if the iron content has dropped, but it must be consistent,” said the buyer based in East China. “What is not good is having high in some shipping and low on the others – this is like opening a blind box.”
PBF trade in the Seaborne market is based on a price of 61% Fe, with advance payments, while the final cargo price is usually adjusted based on quality as determined by the analysis of the disposal port, the market source said.
“Adjustment based on the dollar [based on discharge port analysis] It might not be enough to compensate for the discount that will be taken by cargo when sold as a port of port, “said the buyer, adding that the distribution up to Yuan 40/WMT ($ 5.60/WMT) could apply to Port stock trading.
Quality inconsistencies can also complicate operational planning in a large explosion furnace, the buyer said.
Differential PBF looks stabilized
With BHP also revised specifications in all of its superior middle class products-CARE C, Jimblebar Fines and Newman-Pasar High Class Fines Carefully Watch Q3 for Shifting in the Middle Class Fines, Drawing New Comparisons between PBF and Macf with their current specifications.
Market participants noted that Rio Tinto and BHP took a different approach to updating their specifications. Rio Tinto gives buyers notice first before giving a new quality PBF cargo, offering greater transparency, although the purchase-to-consuming cycle of two months still leaves some uncertainty of assessment.
Conversely, BHP gradually provides lower quality fines before announcing updated specifications, making buyers make most of the announcement as a confirmation of what they have received in practice.
In terms of spot sales, Rio Tinto has so far sold the updated PBF in the Seaborne market at a fixed price of a floating price, according to data collected by platts.
While the initial transactions are declared as a difference with the price of the Futures next month-reflecting a $ 2.20/DMT discount for the 62% Iodex Fe next month, this has been stable at around $ 1.60/dmt, similar to the level seen for BHP Macf discounts, the data shows.
Following the changing specifications, spot transactions from mid -August saw the spread between PBF and Macf narrowed, data showed, with an additional brand premium for MacF down to $ 0/DMT from $ 2.15/DMT on August 18.
Before the PBF premium level declined, market participants quoted metallurgical nature and quality consistency as the main driver of the price distribution between PBF and Macf.
Middle value to get a footing
In the midst of market adjustments and tolerance shifts in the middle class fines, market sources said the reduction in raw material costs had encouraged the Chinese factory to return from the main non-muscle material discounted to the Mainstream Middle Fines in Q3, supported by a better Q2 margin.
Meanwhile, the full supply of Australian miners after post-storm Q1 interference added further pressure and maintaining competitive prices, with five main stream brands accounted for 83.2% of the total spot trading in Q2, up from 77.5% in Q1, according to data compiled by platts.
Liquidity for PBF returns to the spot market after its adjustment, with 4.76 million DMT traded in Q2 – up 82% of Q1 – including 1.7 million DMT PBF below the new specifications, the data shows.
With PBF phosphorus content rising to 0.1%, the market must adjust to a higher level in the main brand. Given the relatively low phosphorus in domestic and imported Chinese concentrates, some steel makers recorded an increase in tolerance to the range of 0.09% -0.1%, with an implied sentence to narrow it.
On June 3, the platts decreased the differential phosphorus to $ 0/DMT for the first ribbon penalty 0.09% -0.1% phosphorus.
Along with the increase in the PBF Spot Market liquidity, which also affects tolerance for a higher silica cargo, Q2 sees four rounds of domestic Chinese coke price cuts each Yuan 50-75/DMT, according to local media reports.
This further supports the consumption of high, medium -sized, market sources of sources, said, with the narrowing of the silica differential which is considered platts during the quarter.
High value to see more demand
While the middle class segment remains attractive to the Chinese steel factory, the postponement of the initial Q2 loading for a high level of Karajas by Brazilian Miners Vale has maintained the spread of 65/62 High-Tren which can survive to Q3, said market sources.
A more successful sales tender for the non-main middle Karajas cargo appears in the Seaborne Spot Market, while Vale also updates its IOCJ portfolio in the middle of the developing iron ore market.
In addition, Q2 sees an increase in the use of domestic and import concentrates as supplies built in the domestic and sea markets, according to data collected by platts.
Market sources said the initial disturbances to the supply of peru concentrate driven by demand and use of low-cilika concentrates, especially Anglo American Minas Rio and ACU premium feed from Vale-supporting the high-high pellet feed market.
When market participants strengthen lower landscapes, higher silica in the middle of degradation in the middle class segment, high-quality products tend to see greater absorption between factories combining feed, especially with the Simandou Rio Tinto mines which are regulated to increase high quality supply in the near future.
Source: Platts
