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Demand for non-mainstream fines in China strong on high iron ore prices

Singapore — Demand for non-mainstream iron ore fines in China is rising, following strong iron ore prices and less availability of medium grade mainstream fines, market participants said Friday.

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S&P Global Platts assessed 62% Fe IODEX at $110.20/dmt Thursday, up $3.7/dmt on day, and gained $37.85/dmt or 52.3% year-to-date.

"We have to consider using more discounted, or non-mainstream fines in blast furnaces, as reducing cost is the priority in falling steel margins," a Hebei-based procurement source said.

Another private steelmaker from Shandong said that they were giving more tolerance on impurities, as long as the cargo was cheap.

57.5% Fe Indian fines, which contains 5.5% alumina, is very easy to draw buyers and recent trades have been concluded at strong levels, an international trader said.

Rio Tinto was heard to have sold a 190,000 mt cargo of 59% Fe SP10 fines at a discount of 6% over July IODEX assessment through a spot tender Thursday, for loading June 29-July 8.

The discount has narrowed from 13% two months ago, and market participants expected that SP10 will get more buying interest as the supply of mainstream cargoes was tight.

"Some mills used to buy MNP and BRBF only, but following a supply shortage this year they have to be more flexible," a Chinese trader said.

Vale sold less Brazilian blend fines to China this year, due to the collapse of Brumadinho dam in Brazil which occurred in February.

Rio Tinto recently delayed July and August loading Pilbara Blend fines and Pilbara Blend lump to some term customers in China, and market sources estimated around 2 million mt of cargoes will be affected.

"BHP will also reduce the supply of Newman fines in July, and increase Jimblebar blend fines (JMBF) production instead," a term buyer from BHP said. Floating price of JMBF was traded at a premium of $0.45/dmt Friday, up from $5.95 discount on January 2.

JMBF typically contains 60.3% Fe, 3.1% alumina, 4.6% silica and 0.12% phosphorus.

-- Lu Han, lu.han@spglobal.com

-- Edited by Nurul Darni, newsdesk@spglobal.com