Spot prices of seaborne iron ore lump have climbed for a third week, lifted by a scramble for November-shipment cargoes as seasonal demand strengthened for the material as a substitute for sinter and pellet.
Platts assessed the weekly spot lump premium at $0.1775/dry mt unit, up $0.03/dmtu week on week. The premium, assessed Tuesday this week because of a Singapore public holiday Wednesday, is normalized to a CFR basis and expressed over the IODEX fines assessment.
As steelmakers sought to buy lump for November, when operations at some sintering units in Hebei province may be cut to improve air quality for a major conference in Beijing, mill sources have reported being unable to find supplies.
One trading source also said BHP Billiton had already sold all its lump for that month, something the miner does not comment on.
"Last week when we tried to buy lump, traders were at least able to reply with some offers," said a source at a mill based in Central China. "But this week, traders no longer have material for us to negotiate over."
Offers were heard at as high as a $0.20/dmtu premium on a CFR basis to the IODEX, and some mills, likely with supply secured through term contracts, said they would look to pay a premium of, at most, $0.14-0.16/dmtu.
Rio Tinto sold a 70,000 mt cargo of Pilbara Blend lump Monday at $93/dmt CFR Qingdao in a single shipment loading November 7-16, which, when compared with the price at which PB fines traded on the same day at $81.80/dmt CFR Qingdao, yielded a calculated premium of about $0.18/dmtu.
Already last week, signs of a sharper rise in prices could be seen in the Thursday sale of a 110,000 mt cargo of 63.2%-Fe Newman Blend lump loading November 16-25 at a premium of $0.1856/dmtu FOB basis to the November average of the IODEX.
This normalized to $0.1785/dmtu on a CFR basis, after taking into account underlying moisture differences in the fines and lump indexes and a freight assessment of $7.15/wet mt for the Port Hedland-Qingdao route for Capesize vessels, Platts calculations showed.
Spot lump demand had also firmed as a result of winter restocking by steelmakers, a source in Hebei said.
"It is still unclear how much domestic concentrate production will decline in winter, but it definitely will during the colder months," he said. "Even before winter, we already are hearing of some domestic mines shutting down."
