Seaborn medium and high grade iron ore prices on CFR North Asia basis reached new highs Tuesday on strong demand from Chinese steel mills, who were restocking ahead of the winter season, market sources said.
S&P Global Platts assessed the 62% Fe Iron Ore Index at $70.55/dry mt CFR North China Tuesday, up $1.15/dmt from Monday, crossing the $70/dmt level for the first time since March 15.
The 65% Fe Iron Ore Index was assessed at $97.40/dmt CFR North China Tuesday, up $1/dmt from Monday, reaching a new high since September 13, 2017.
Market sources expected current demand levels to be sustained in the near term, with steel mills operating at high blast furnace utilization rates to capitalize on strong steel margins before more production and sintering cuts come into place for the winter season.
"Current steel margins are attractive, so steel mills will keep their production rates at high levels. With Pilbara Blend fines (PBF) as a mainstay in blast furnace blend ratios, demand will remain strong until late October at least," a Chinese trader said.
Continued strong steel margins are also encouraging steel mills to utilize more efficient high grade raw materials like Carajas fines, a Northern Chinese mill source said.
"This year's sintering and production cuts are decided by local authorities so mills would also prefer to have sufficient stockpiles of high grade raw materials in case of last-minute further cuts," the source added.
A tightening in readily available iron ore supply was also expected to support current prices.
"There has been a sharp decline in PBF available at certain ports like Rizhao, where demand from Shandong mills remain on the high side," another Chinese trader said.
"As such, demand for seaborne cargoes will remain high with plenty of reselling opportunities at these ports," the trader added.
"Mainstream medium grade Australian fines are not so readily available for the October loading months with supply in the hands of traders. Hence, mills will have to pay a certain premium with lesser availability from the minters," an eastern Chinese mill source said.