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Demand for low grade iron ore fines increases as end-users seek to lower production costs

Increasingly higher prices for medium grade fines was steering demand towards low grade fines as mills sought to lower their production costs.

S&P Global Platts assessed the 58%-Fe Iron Ore Index at $43.30/dry mt CFR North China Tuesday, up $0.50/dmt on week, with a current spread of $8.30/dmt between the 58%-Fe and 62%-Fe iron ore indexes.
“Mainstream medium grade fines like Pilbara Blend fines (PBF) are proving to be expensive due to the current tightness of supply,” a northern Chinese mill source said. “With the priority on capitalizing on current steel margins before further sintering cuts, rather than reducing pollution output levels, mills are preferring to utilize more low grade fines to lower the costs of raw materials,” the source added.

“Domestic concentrate prices have been attractive recently due to an increase in supply. Many mills are actively buying more low grade fines to mix with their domestic concentrate inventories,” a Chinese trader said. The blast furnace performance of a mixture of low alumina domestic concentrate and Super Special fines (SSF) is similar to that of PBF, the source added.

Relatively stable prices for high grade fines in contrast to higher prices for medium grade fines was also increasing demand for low grade fines as several end-users utilized a more economical high grade-low grade fines mixture.

“Prices for Carajas fines have not increased as much as medium grade fines. As such, some mills are able to lower their costs by mixing Carajas fines with low grade fines to achieve a similar output to PBF,” an eastern Chinese mill source said.

SSF was observed to be trading higher in northern Chinese ports at around Yuan 360-370/wmt, up from Yuan 310-330/wmt last Tuesday. Supply from Fortescue Metals Group was lower in October according to Platts data, providing upwards pressure on spot prices of low fine grades.

Australian miner Fortescue Metals Group has kept the discounts of its term contracts for 58.3%-Fe Fortescue Blend fines and 56.7%-Fe Super Special fines for November loading unchanged from October, as reported by Platts earlier.
Source: Platts

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