1. Iron Ore Market

Seaborn prices for iron ore rose by and large in China this week. After the holiday, most mills purchased iron ore mainly as their needs. In order to improve cash flows, traders were active in sales.

Currently, iron ore futures prices and its basis largely caused the variation. SteelHome considers that prices of iron ore may observe rangebound movements in the short run.

T1: China Iron Ore Price by Product

Source: SteelHome Database

*Need More Data? Just Click SteelHome Database (Microsoft's Windows Version)

1.1 Highlight

(a) according to SteelHome survey, iron ore inventory at 46 main Chinese ports was 123.6 million tonnes as of October 9, 2020, up 950,000 tonnes from September 30.

Of the stocks, about 56.7 million tonnes belong to traders. The stocks comprise 24.9 million tonnes of lump, 10.95 million tonnes of pellet and 11.9 million tonnes of concentrate fines. Daily shipment was 3.01 million tonnes, up 220,000 tonnes from the previous week.

Meanwhile, daily iron ore arrivals at five largest Northern ports (Qingdao, Rizhao, Tianjin, Caofeidian and Jingtang) reached 1.77 million tons this week, up 120,000 tons from last week.

(b) Brazil exported around 37.86 million tons of iron ore in September, which was up by 18.5% from the same month a year ago, data from the Ministry of Industry, Foreign Trade and Services of Brazil.

In the same period, the exports valued at US$3.094 billion, up by 48.9% year-on-year. The unit price of iron ore exported came to US$81.73 per ton, up 25.66% from the same month a year ago.

(c) October 9th, 2020 - Vale S.A. (“Vale”) informed that its Board of Directors approved the establishment, by its subsidiary Vale International S.A., of a Joint Venture (“JV”) with Ningbo Zhoushan Port Company Limited (“Ningbo Zhoushan Port”), a subsidiary of Zhejiang Provincial Seaport Investment & Operation Group Co. Ltd. (Ningbo Zhoushan Port Group Co. Ltd.), to build, own and operate the West III Project ("Project") in Shulanghu Port, Zhoushan City, Zhejiang Province, China.

The West III Project consists in expanding the Shulanghu Port facilities, developing a stockyard and loading berths with additional 20 Mtpy capacity. By participating in the Project, Vale will secure a total port capacity of 40Mtpy in Shulanghu, which will help Vale to optimize its overall supply chain costs.

The Project has total multiyear investments of RMB 4.3 billion (~US$ 624 million, full equity, 100% basis) and it includes acquisition of land rights and the development of port capacity of 20 Mtpy, including the construction of a new stockyard and two loading berths, subjects to regulatory approvals.

Vale will own 50% of the JV and both parties intend to obtain third-party loan of up to 65%, but not less than 50% of the total investment. With these assumptions, Vale’s capital contribution to the project will vary between US$ 109 million and US$ 156 million, approximately. The construction of the project, which is expected to take up to three years, will start after both parties obtain the anti-trust and other regulatory approvals in China.

The Project secures strategic port capacity for Vale in China, as Shulanghu Port berths Valemaxes and allows Vale’s shipping and distribution costs optimization.

(d) Venture Minerals Announced Riley Iron Ore Mine's Wet Screening Plant Construction Underway

HIGHLIGHTS

1.      Venture commences Wet Screening Plant construction with Stage One in progress;

2.      Successful completion of initial stage of mining and dry screening operations produced approx. 2,000 tonnes of high specification product;

3.      Current Riley Mine economics well above August 2019 feasibility numbers which were based on a US$90/tonne 62% Fe price (Refer to ASX announcement 22 August 2019) due primarily to higher Fe prices (>US$120/tonne 62% Fe price*) and lower fuel prices, and further supported by a strong Iron Ore market outlook;

4.      Venture continues to consider a number of advanced financing proposals to deliver nameplate production at Riley.

1.2 Trading Tips

Traders are suggested to properly sell iron ore. Mills are suggested to keep the in-plant inventory at a normal consumption level.

2. Semis Market

Prices of semis surged in China after the holiday by and large. As the policy on production curbs issued in Tangshan on September 6 which delayed to September 12, some steel rolling mill plants halted production. Therefore, most plants purchased semis mainly as needed, and only some had restocking operations

Affected by the post-holiday price hike in steel futures market, semis transactions increased amid active trading by traders.

SteelHome considers that prices of semis in Tangshan may inch up amid fluctuations in the near term.

T2: Prices of Q235 in Main China’s Market

Source: SteelHome

2.1 Highlight

Semis stocked at 16 large warehouses in Tangshan were 506,700 tons on October 9, 2020, down around 27,200 tons from September 30, 2020.

2.2 Trading Tips

Steel rolling mill plants are suggested to purchase semis products mainly as their normal consumption levels amid escalating trade uncertainties.