Australian mining company Rio Tinto made its first ever iron ore sale in yuan from the northern Chinese port of Rizhao to a regional steelmaker, market participants said.
A source close to the matter said that the first cargo Rio Tinto sold was 10,000 mt of SP10 fines, and the miner has discharged 170,000 mt of SP10 fines co-loaded with SP10 lump at Rizhao port for the first trial shipment.
Rio Tinto told S&P Global Platts that it had established a small team to conduct a limited volume of iron ore sales from stockpiles at ports in China. This trial reflects the increasing significance of sales from ports and the impact this has had on the iron ore procurement strategies of steel mills in China.
“As a major supplier to customers in China, we believe port sales could potentially help us to better serve our existing customers, as well as potentially opening up an opportunity to sell to new customers who do not participate in the seaborne market,” the company added. It declined to give details of specific sales.
A source at a large trading company said Rio Tinto plans to sell 500,000 mt iron ore at Chinese ports this year.
Rio Tinto said that at this stage this portside trading channel is only intended to promote its niche products.
“The trial is limited in scope and volumes to help determine whether this model makes sense for Rio Tinto on an ongoing basis,” the company said.
Traders said that they may need to avoid trading SP10 products at ports because it would mean direct price competition with Rio Tinto.
“Many iron ore miners have started sales in yuan this year, but many of them are only doing small volumes at the current stage except for Vale. We need to be more selective in trading products in the seaborne market,” a trader said.
Source: Platts |
