ASIA IRON ORE: Spot prices climb on stronger mill demand

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Publish time: 28th March, 2013      Source: ChinaCCM
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Seaborne iron ore prices strengthened Wednesday as more steelmakers sought spot cargoes to replenish low inventory levels. Platts assessed the 62% Fe IODEX up 75 cents to $138/dry mt CFR North China.
Market participants said that there was still firm interest from mills because they needed to restock on iron ore.
"Ore trade levels are quite strong now and there is also more trading activity going on, a sign of improved demand from buyers," a Guangzhou-based trader said.
A Hunan-based mill source said that it was trying to maintain about a month's worth of iron ore inventories and that more mills were buying spot iron ore currently, after having resumed restocking schedules from about two weeks ago.
A Shandong-based mill source agreed, saying it still needed to purchase spot material quite regularly as ore stock levels were being kept at 1.5-2 months' worth in its facility.
But sources said it was uncertain if the uptick in spot iron ore prices could be sustained as some market participants felt it was purely sentiment-driven and not a result of fundamentals truly improving.
"Iron ore prices are motivated by [the] sentiment these days that it's really one price for each day, depending on the external economic factors that could steer it a particular direction," a Singapore-based trader said. "I don't think anyone can identify a clear and discernible price trend for iron ore as it's so volatile."
Separately, sources said China's average daily crude steel output for the second 10 days of March weighed in at 2.064 million mt/day, according to estimates by the China Iron & Steel Association. This was marginally down by 1% from the 2.085 million mt/day level in the first 10 days of March.
With persistent woes of steel overcapacity among the Chinese mills over the past month, this slight decline in crude steel production was good news for the steel and iron ore markets.
On physical steel, the Tangshan square billet price was unchanged from Tuesday at Yuan 3,250/mt ($518/mt) ex-stock Tangshan, according to a mill source in the region.
Tangshan-based Yanshan Steel awarded its weekly billet tender at Yuan 3,250/mt ex-works Wednesday, Yuan 35/mt higher than last week.
Rebar futures also stayed rangebound with the most actively traded October contract trading at Yuan 3,889/mt ($620/mt), up Yuan 7/mt from Tuesday, settling at Yuan 3,898/mt, up Yuan 5/mt on the day.
MORE ACTIVE ORE MARKET
Australian miner Arrium Mining and Minerals was offering high-silica fines and lump cargoes Wednesday, in a tender that was first tabled Tuesday, said traders who received the tender. The first was a 23,000 mt parcel of 51.8%-Fe Iron Knob Fines that contained 5.9% alumina, 11.9% silica and 0.11% phosphorus.
The lump component consisted of 17,000 mt of 55.3%-Fe Iron Knob Lump, containing 4.% alumina, 9.8% silica and 0.09% phosphorus. Both cargoes will load over April 16-25 from the port of Whyalla in South Australia. The tender closed at 11 am Singapore time (0300 GMT) Wednesday, but no trade details were available.
A procurement source for a northern Chinese mill said that they participated in the tender for the Arrium cargoes even though they don't usually like to take high-silica material as they happened to have lower-silica product on hand that could be blended for steelmaking.
"But the price has to be extremely competitive for the Arrium cargoes, otherwise I wouldn't think of buying material with such high levels of silica and alumina," the source said.
TRANSPARENT SPOT LUMP OFFER
During the Platts Market On Close assessment process, trading company Stemcor offered 90,000 mt of 63%-Fe Australian Newman lump at a premium of $0.17/dmtu to the average of Platts 62% Fe IODEX assessments for the month of May. The offer, exposed to the open market for nearly half an hour, was not taken out by 5:30 pm Singapore (0930 GMT), the closing timestamp of the assessment process.
Last week, BHP Billiton sold two cargoes of MAC lump at premiums of $0.16/dmtu to the IODEX, and a cargo of South African lump traded at a premium of $0.155/dmtu.
Meanwhile, BHP Billiton sold a cargo of 58%-Fe Australian fines at $128/dmt CFR Qingdao on the globalORE platform. The 90,000 mt shipment will be delivered in May. This cargo was not reflected in Platts assessment Wednesday as it was not clear if bidders knew what brands they would be taking delivery of at the point of trade.
Trading company Synergy Resources HK Ltd. was offering a combined shipment of two parcels of fines, totaling 50,000 mt, due to load on the east coast of India April 5-10. The first was 63/63%-Fe fines with 3% alumina and 3.5% silica, combined a second parcel of 60/60%-Fe fines with 4% alumina and 4.5% silica.
Elsewhere, Indian miner Essel mining was heard offering a combination cargo of 35,500 mt 63.5/63%-Fe fines containing 3.5% alumina and 3.5% silica, and 3,000 mt 58/57%-Fe fines containing 5.5% alumina and 6% silica. Meanwhile, a Shanghai-based trader received an offer of $100/dmt CFR China for 53/52%-Fe Indian fines from another trader Wednesday. He said this offer level had moved higher from $95/dmt CFR China a few days ago, but did not think it could be concluded at anywhere near the current offer price. The 40,000-50,000 mt parcel will load over end-March to early-April, and contained 4% alumina and 7% silica.