According to S&P Global Platts, contract customers reported that Australian iron ore mining company BHP has raised the May monthly discounts for Jimblebar Fines and Yandi Fines compared with the 62% Fe indexes, while the price for MAC Fines was maintained at parity.
Jimblebar Fines has a standard iron content of 60.5%, Yandi Fines have a standard iron content of 57%, and MAC Fines have a specification of 61% iron.
8-month low levels
Platts reported that according to sources, the May monthly discounts for Jimblebar Fines were raised to 4% compared to the 62% Fe indexes in April. This is the cheapest level for Jimblebar Fines since August 2020.
Meanwhile, the discounts for Yandi Fines increased to 4.5% compared to April, the lowest level since July 2020. Sources reported that the monthly price for MAC Fines was maintained at parity with the average of 62% Fe indexes.
Improved cash margins
Due to stringent emission norms, some steel production hubs in China had increased curbs in production to reduce crude steel output and lower emissions. There were also supply constraints amid rising downstream steel demand. All these had resulted in lifting margins for Chinese steel mills.
Platts said that the cash margins for Chinese rebar and hot rolled coil were calculated to be $130/mt and $160/mt, respectively, the highest in two-and-half years.
Muted demand for low Fe content brands
The iron ore brands with lower iron content are no longer favored by Chinese mills, as the preference has now shifted to medium- and high-grade products. The Chinese steel mills with less stringent production curbs have been favouring increased average iron content in their ore blends to maximize hot metal output.
This, in turn, has resulted in lower demand for Jimblebar Fines, the lowest among the five iron ore brands under the Platts medium-grade index, and Yandi Fines, which falls under the low-grade iron ore fines category.
Platts also quoted some end-user sources stating that the recent cargoes of Jimblebar Fines had inconsistent iron content, with some cargoes falling below 60% Fe content. This also contributed to the decline in its demand.
Increase in spot supply
The decrease in price levels for Jimblebar and Yandi Fines was also driven by their increased spot cargoes. The spot supply of Jimblebar and Yandi Fines had recently reached a high and many cargoes were sold as whole shipments, rather than the usual parcel sales.
In comparison, the spot cargoes for Newman High Grade Fines had remained low due to planned Ore Handling Plant and stacker maintenance at the Newman mine in Australia.
Platt’s China-based end-user source said: “Jimblebar and Yandi were getting too expensive previously due to synchronized recovery in global demand. They are now returning to normal levels, as spot supply is plenty and Chinese mills’ procurement preference has moved to the medium- and high-grade products.”