FIS Daily Ferrous Report

– Iron ore prices had scaled down on limited restocking as Platts assessed the 62% Fe Iron Ore Index at $94.40/dry mt CFR North China on Monday, down $1.05/dmt from Friday.

It was heard that end-users were concerned over high steel prices and thus limited their large-scale restocking. Moreover, market participants were also concerned over the escalating trade tension between the US and China that decreased iron ore demand.

Domestically, China recorded a low car sales in April , down 14.6% year-on-year which raises market concern over downward push on steel demand for automobiles sector. Thus, some Chinese mills are trying to save costs in steel-making with their preference of mixing the cheaper low grade ore with high grade ores.

-Buying activity on coking coal has slowed down as buyers are waiting for the high prices to fall. As such, Platts assessed Premium Low Vol coal steady at $212.50/mt FOB Australia, while the CFR China was down 25 cents/mt to $210.25/mt CFR China on Monday.

Chinese buyers were quiet in the procurement activity as they were still processing the high coking coal prices recorded on last week. The high coking coal prices have deterred buyers to import seaborne cargoes and many buyers expect price correction over the near term.

Similarly, the high prices of coking coal discouraged the Indian buyers into procurement decision and many choose to adopt a wait and see attitude to capitalize on price changes.
– Brazil’s Vale plans to invest $2.75 billion in dry iron ore processing over the next five to achieve 70% dry iron ore processing by 2023.

By using more dry iron ore processing, the miner will use less dams for mining operation which resulted the unfortunate dam rupture in Brumadinho in early 2019.

So far, Vale has invested $17.5 billion over the last 10 years in dry iron ore processing, and this resulted almost 200 million mt or 80% of the iron ore produced from the company’s Northern System in 2018.

Meanwhile, only 32% of  the mining complex in Minas Gerais was produced from dry iron ore processing as of 2018.

 

– And in the midst of the US-China Trade War,  there are similar back-up plan from both sides … namely infrastructure stimulus plan in 2019

1) US pledges $2 trillion at Infrastructure Plan in late Apr 2019 – a rare co-operation between Republican and Democrats

2) China’ plan of $119 billion infrastructure investment in 2019 (announced in early Mar) -mainly for railway , road and waterway projects, e.g Sichuan-Tibet Railway