World’s iron ore tonnage recovers in Q2, China supply up
Their total iron ore shipment for the first six months of 2019, nevertheless, still declined 9% or 50.8 million tonnes on year to 513.4 million tonnes, Mysteel Global calculated from the publicly-available data.
China’s iron ore imports for January-June fell by 5.9% on year to 499 million tonnes, according to the latest statistics from the country's General Administration of Customs.
The less supply from the top four miners especially to the global destinations especially to China was made up by a few sources such as port inventories at the 45 Chinese ports and the higher self-sufficiency from domestic iron ore production.
By the end of June, the iron ore port inventories fell 25.9 million tonnes from the end of 2018 to 115.7 million tonnes as of June 27, and over January-June, China’s domestic run-of-mine iron ore output grew 5.6% on year to 406.9 million tonnes, and the concentrates output grew 6.2 million tonnes on year to 129.5 million tonnes.
The persistent concern on supply stretch in response to Vale’s accident and the cyclone in Australia afterwards, saw China’s imported iron ore prices experience substantial surges, with Mysteel’s 62% Australian iron ore fines index for seaborne iron ore cargoes grew $21.9/dmt on year to $91.4/dmt CFR Qingdao on average for January-June, and the price has been sustaining at over $100/dmt CFR Qingdao since June 10.
As for the core branded products from the top four miners, FMG’s Blend fines experienced the most substantial 108.8% year-on-year growth in price to $89.38/dmt CFR Qingdao over January-June on average, and Vale’s BRBF, one of the key products affected by the accident other than its pellets, was ranked the second in price surge by 54.6% on year to $105.36/dmt CFR Qingdao on average, according to Mysteel’s pricing data.
The strengthening in prices by different degrees has indicated the Chinese steel mills’ fine adjustment of their appetites for imported iron ore since early 2019 for the best cost discipline, and lower-grade ferrous content supplies such as FMG's Super Special Fines and FMG Blend Fines have been with growing preference by the Chinese steel mills for their cost effectiveness and the nice pairing with the China’s 64-69% ferrous content concentrates, Mysteel Global understands.
The affection in the first half of 2019 has prompted both Rio Tinto and Vale to lower their Year 2019 shipment guidance, though both are highly likely to ship more iron ore for the second half of 2019, and Vale is picking up speed slowly when it announced on July 23, expecting another 5 million tonnes of iron ore output from the Vargem Grande complex, a component of its Southern System in Minas Gerias shortly after its full resumption of operations at its Brucutu mine within 24 hours.
BHP and FMG, on the contrary, have raised their production or shipments guidance for the FY20 (July 2019-June 2020), as the affection was fully digested in their FY19 performance, as Mysteel Global reported.
As for China’s domestic iron ore supply, market sources expect the growth in concentrates to range 10-20 million tonnes depending on the price movements.
Written by Victoria Zou, zyongjia@mysteel.com
Edited by Hongmei Li, li.hongmei@mysteel.com
Table 1 Iron ore production/sale/shipment of major miners over April-June
|
|
Apr-Jun (million t) |
Q-o-Q |
Y-o-Y |
Jan-Jun 2019 (million t) |
Y-o-Y |
2019 Guidance (million t) |
Estimated Jul-Dec 2019 (million t) |
Vale |
Fines production |
64.1 |
-12.1% |
-33.8% |
136.9 |
-23.4% |
307-332 (Iron ore and pellets sales) |
136.1-161.1 |
Fines sales |
61.9 |
11.8% |
-15.5% |
117.4 |
-18.8% |
|||
Pellets production |
9.1 |
-25.5% |
-29.3% |
21.2 |
-17.1% |
|||
Pellets sales |
8.8 |
-28.2% |
-33.2% |
21.2 |
-19.7% |
|||
Rio Tinto |
Production |
79.7 |
5% |
-7% |
155.7 |
-8% |
320-330 (Shipments for 2019) |
151.2-161.2 |
Shipments |
85.4 |
24% |
-3% |
154.6 |
-8% |
|||
BHP |
Production |
71 |
12% |
-1% |
134.7 |
-3.2% |
273-286 (Production for FY2020) |
- |
Sale |
72.5 |
15% |
2.0% |
135.3 |
-2.8% |
|||
FMG |
Production |
48.5 |
13% |
10% |
91.5 |
10% |
170-175 (Shipments for FY2020) |
- |
Shipments |
46.6 |
22% |
0.2% |
84.9 |
-0.4% |
Table 2 Quarterly average price of miners’ major iron ore products ($/dmt CFR Qingdao)
|
Apr-Jun 2019 |
Q-o-Q |
Apr-Jun 2018 |
Y-o-Y |
|
Rio Tinto |
61% Fe PB Fines |
98.01 |
20.5% |
64.19 |
52.7% |
Vale |
65.1% Fe Carajas Fines |
114.63 |
19.6% |
85.13 |
34.6% |
63% Fe BRBF |
105.36 |
23.5% |
68.16 |
54.6% |
|
BHP |
62.4% Fe Newman Fines |
100.32 |
20.6% |
66.61 |
50.6% |
FMG |
58.3% Fe FMG Blend Fines |
89.38 |
37.5% |
42.80 |
108.8% |
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