In the 3Q20, the average reference price for iron ore of 62% Fe was US$118.21/t, 26.8% higher compared to the previous quarter (2Q20: US$93.30/t).

The adoption of stimulus packages in China, especially for new investments in infrastructure, generated positive impacts on the Chinese economy in the third quarter. Chinese steelmakers set a new monthly record for crude steel production in August, reaching 94.8 Mt, a volume 8.4% higher than the same period last year. In the year through August, crude steel production in China increased by 3.7% compared to 2019, totaling 688.9 Mt, reaching an annual pace of over 1 billion tons (source: National Bureau of Statistics of China and WSA).

In this scenario of strong recovery in Chinese demand, the drop in Australian iron ore exports - due to scheduled maintenance at the ports after the end of its fiscal year - led to a limited supply of ore in the market and, consequently, higher prices throughout the quarter.

The spread between the price of 65% Fe ore and 62% Fe was traded at $10.68/t in the 3Q20, a 28.9% drop from the $15.02/t average in the 2Q20. With the reduction in the supply of 62% Fe ore, there was a strong appreciation of this index, which also caused the spread to fall significantly compared to the previous quarter.

The value of ocean freight, on the other hand, accumulated an increase of 49.8% over the 3Q20 compared to the 2Q20. The average rate for Capesize vessels for the route between Tubarão and Qingdao was negotiated at US$17.86/t against US$11.92/t in the 2Q20, driven by the strong resumption of Brazilian export volumes and the impact of congestion in ports and availability of ships.

Operating and Sales Performance - Mining

In the 3Q20, production volume was 2.3 million tons, an increase of 15.1% compared to the 2Q20 (2.0 million tons), mainly due to the higher operational performance and the resumption of production levels, after a scheduled stop, occurred in the previous quarter, at one of the beneficiation plants.

Sales volume was 2.3 million tons in the 3Q20, 20.6% higher than in the 2Q20 (1.9 million tons). This increase reflects the higher demand for iron ore in foreign and domestic markets and the higher sales volumes.

The production and sales volumes are shown below:

In the 3Q20, distribution by commercial condition was 89% of exports in the CFR (Cost and freight) modality and 11% FOB (Free On Board), compared to 79% and 21% in the 2Q20, respectively.

More Info: Usiminas 3Q2020 Report