Spot prices of seaborne iron ore lump rose to the highest in seven months, driven by a scramble for material arriving in November. Mills continued to buy lump anticipating the need to reduce sintering during the winter months.
Platts assessed the weekly spot lump premium at $0.205/dry mt unit, up $0.0275/dmtu week on week. The premium is normalized to a CFR basis and expressed over the IODEX fines assessment.
The premium reached the $0.20/dmtu mark on an FOB basis last Thursday, when a transaction involving 63.2% Fe Newman Blend lump took place at that level for an 80,000 mt cargo loading November 3-12.
This normalizes to $0.191/dmtu on a CFR basis, based on a calculation using the October 23 IODEX value of $79.75/dmt and Capesize freight of $8.80/wet mt. "The lump premium has risen the last few weeks because the northern mills have not been able to take on that much fines for sintering, so they have to buy more lump," a source at a steelmaker in the eastern province of Anhui said. "They have no choice."
On Wednesday, Rio Tinto sought to sell 62%-Fe Pilbara Blend lump at $94/dmt CFR China on the Chinese COREX platform, sources monitoring it said.
A bid for the 70,000 mt cargo loading November 14-23 was made at $92/mt.
Rio had offered the same cargo Tuesday at $93/dmt, without having found buyers.
Still, mill sources in Hebei and eastern China said while lump demand has picked up, they wouldn't buy lump at $0.20/dmtu on a CFR basis because they had enough through term contracts.
One trader noted that demand has been focused mainly on cargoes arriving in November.
"No one's trading December yet, as they're not confident of where price levels would be, either on a fixed price or premium basis," he said.
