The price for Brazilian high-grade iron ore, with 65 percent iron content, was $118/mt on July 21 against $114/mt on July 15, CFR China.
According to analysts, the increase reflects a combination of factors, the most important of which is the announcement made by the Chinese authorities of the construction of the world’s largest hydroelectric dam, which is supposed to require an enormous volume of steel, and iron ore as consequence.
In the specific case of the high-grade ore, the increase reflects also the shortage of the product, as the Brazilian miner, Vale, is reducing its production and increasing the availability of lower grade ores, in its strategy to serve the Asian markets.
The export price of blast furnace grade pellets is now $131/mt against $127/mt last week, CFR China, maintaining the same premium relative to sinter feed fines.
The premium for Brazilian high-grade ore, containing 65 percent iron, relative to Australian 62 percent iron ore, based on their iron units, declined to 9.9 percent from 10.5 percent previously, still reflecting high interest of integrated producers for the performance of premium ores when processed in blast furnaces.
In the Brazilian domestic market, reference prices are now $95/mt for the ore and $108/mt for pellets, up from $92/mt and $105/mt, respectively, ex-works and excluding taxes. These prices have been negatively affected also by higher Brazil-China freight rates, as the domestic price in Brazil is based on the FOB quotation, using CFR China as the reference.
In June, Brazil exported 36.3 million mt of combined iron ore and pellets. Preliminary data indicated lower volumes for July.