London — Hebei Iron & Steel (HBIS Group), the world's third-largest steelmaker, traded in the IODEX Platts Market on Close assessment process Friday, moving 2017 volumes traded in the MOC above 2 million mt, S&P Global Platts data showed.
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Some 2.16 million mt of iron ore fines and lump have traded in the Platts MOC process in 2017 to date. In the fourth quarter alone, traded volumes amounted to 1.13 million mt, showing the ramp-up in activity in the MOC process.
Four of the last 10 trades in the process have involved entities linked to, or directly owned by, steelmaking enterprises in China. A mixture of mainstream, Australia-origin fines and lump brands has been traded.
One minute before 5:30 pm Singapore time Friday, HBIS Group Hong Kong Co. Ltd. sold to Cargill International Trading Pte Ltd at $69.50/dmt CFR Qingdao for 170,000 mt of 61% Fe-Pilbara Blend Fines.
The IODEX MOC process considers information up until 5:30 pm Singapore time.
The bid reported to Platts had been open to the market from 4:04 pm, before the seller indicated interest to trade the bid. The cargo's laycan is December 25 to January 3, meaning the cargo may be delivered mid-January.
Since mid-November, nearly all CFR China iron ore bids, offers and trades reported to Platts have been for a similar delivery period, with market participants saying demand was strong for that period due to an expected inventory build in the run-up to the Lunar New Year.
Demand for December delivery has been significantly weaker.
Indeed, looking at time structures in the physical market, prices looked stronger for January delivery compared with the relatively hand-to-mouth procurement taking place in China's ports.
Trade for port stocks in China is for extremely prompt delivery -- a few days out at maximum) -- while trade in the seaborne reflects deliveries 2-8 weeks forward.
Comparing the port stock prices with the seaborne prices showed these subtleties in demand patterns.
Platts IOPEX (iron ore port index) East China assessment on an import parity basis averaged 53 cents/mt above Platts IODEX -- the seaborne assessment -- in the first half of November. Since mid-November, IOPEX East China has averaged 41 cents/mt below IODEX.
Similarly, looking at the dollar-denominated swaps forward curve, the December strip continued to price below the January strip -- in a contango structure -- while January-February reverts to backwardation.
TSI swaps were assessed at $68.9/mt for December and $69.05/mt for January. For February swap, the assessment was $68.95/mt on Friday.
Given the nearly $10/dmt gains made in the past two weeks on iron ore, backwardation returning to the forward curve is no surprise after it briefly entered a contango out until Q2, 2018 during early November.
--Ciaran Roe, email@example.com
--Edited by Dan Lalor, firstname.lastname@example.org