China’s iron ore market calmer after Vale Perak fire
Source: Mysteel
Feb 18, 2019 17:00
An iron ore procurement official with a Tangshan-based steelmaker in North China commented that Vale’s reference to having scheduled maintenance at the centre over the same period was significant. “We think the fire’s impact on China’s iron ore market will be limited because (with the maintenance scheduled), Vale should have planned shipments already,” he noted, adding that his mill consumes Vale ore blended at some Chinese ports and so far, the incident has had no direct influence on his mill’s ore supplies.
A Xiamen-based iron ore trader in South China also maintained that the blending iron ore volume was not so big so the impact of this accident on the Chinese iron ore market would not be big either. “Many Chinese steel mills are consuming Vale’s blended ore made at Chinese ports now and besides, they can also use some alternative iron ore products to make up any short-term loss,” he argued. “In terms of severity, the fire is not on the same level compared to the possible loss in Vale’s iron ore production caused by its tailings dam disaster on January 25.”
As of February 15, the CFR price of 63% Brazilian Blend fines was at $90.7/dmt at Qingdao port in East China, up only $0.25/dmt on day, according to Mysteel’s daily price data.
In a note, Wood Mackenzie senior research analyst Alex Griffiths commented that a 10 to 15 day unexpected shut-down translated to a reduction in exports of 600,000 to 1 million tonnes. “But we do not think average export volumes will suffer,” he said in a web post.
Griffiths stressed that the centre should be in a position to increase March shipments to make up for the loss. “The capacity of the import berth (10,500 tonnes/hour) exceeds that of the export berth and so stocks can rise during normal operations.” In addition, “as Vale indicated a 10-day shutdown was coincidentally planned for this period, the most likely outcome is that the company can make up any lost tonnages in March.”
Vale commissioned its Malaysian iron ore distribution centre in 2014, Mysteel notes, which was constructed to improve the supply of Vale’s blended ore to its customers in Asia. Moreover, over the past several years, Vale has also established 16 blending sites at 16 ports in China, an investment Vale says is making its iron ore products more flexible to Chinese steel mills' actual needs.
In 2018, Vale’s Asian blending volume guideline was set at 100 million tonnes, a large increase on the 66 million tonnes in 2017, as reported.
Written by Victoria Zou, zyongjia@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
You May Also Like
FMG ships 47.5 mln t of iron ore in Jul-Sept, up 4.2% YoY
Oct 27, 2022 12:00
BHP's iron ore unit cost climbs 13% on year in FY22
Aug 16, 2022 18:30
Vale's Q2 iron ore fines prices down, but costs rise
Jul 29, 2022 17:30
FMG raises its FY'23 iron ore shipments to 187-192 mln t
Jul 28, 2022 13:00
FMG's Apr-Jun iron ore production table
Jul 28, 2022 08:54