The iron ore market firmed further Thursday as trading sources on the offer side increased their offer levels, following recent increases in freight rates.
The Platts reference price for 62% Fe gained USD 1 DMT at USD 70.50 DMT CFR North China, a 4 month high. Although some sources pegged 63.5 per 63% Fe at USD 75 DMT CFR North China, there were higher offers with up to SD 80 DMT CFR North China from a large Indian miner. As high as USD 80 DMT CFR North China was dismissed by many as too high right now.
A Hong Kong based trading source said that "The Indians are trying to push the offers higher.”
Meanwhile a Chinese steel mill said that they had bought a cargo of iron ore 62% fines Wednesday at USD 65 DMT CFR North China. The material was of Australian origin from a major, delivery was mid June on a cape vessel. However, this too was dismissed by many as too low and not reflective right now of where the market is. Otherwise many traders and steel mills were watching and waiting for the final outcome of the contract settlement, not prepared to enter the spot market. The magnitude of the recent price jump was also cited as a reason for their reluctance.
A Beijing trader said that "Because the price jumped so fast, we have to give mills time to get used to this high price."
Two other deals were reported last Thursday but concluded earlier this week. A Hong Kong based trader said they had sold Monday a 63.5 per 63% Fe cargo at USD 71 DMT to USD 72 DMT CFR North China, but we are not willing to offer right now. Meanwhile a trader booked Iranian 63.5/63% Fe lump cargo with high impurities Wednesday at USD 72 DMT CFR North China. Meanwhile on the freight market, Supramax vessels from the east coast of India were heard at USD 16.5 WMT for one-port loading and USD 20 WMT for two-port loading. Cape vessels rates were at USD 20 WMT slightly down on Wednesday while from Brazil rates bounced up another USD 2 WMT to USD 47 WMT.
Two traders commented that they were now considering booking vessels first when conducting trades, because of the volatility in freight. Freight volatility was widely cited by physical traders as the key factor preventing deals being done at the moment. On the swaps market after a fall for July Wednesday down to USD 71, Thursday's bid offer range was USD 71 to USD 73, while August was pegged at USD 73 to USD 75.