With a reduction of iron ore prices in the Chinese spot market, coupled with stable premium for lumps and pellets and slightly reduced ocean freight rates, prices for iron ore products in Brazil have declined in average by $13/mt from last week.
Sinter feed fines of 65 percent iron contents are now traded for export from Brazil at $130/mt, the equivalent lumps at $134/mt and the equivalent blast furnace grade pellets at $137/mt, all CFR China conditions, dry basis.
In the Brazilian domestic market those prices are now $106/mt, $110/mt and $113/mt, respectively, dry basis ex-works, no taxes included.
Local sources mentioned that speculation in futures markets are one of the main reasons behind the decline, considering that prices have recently reached a peak that was not necessarily based on fundamentals. A possible second wave of the Covid-19 pandemic could also have affected both steel production plans and demand for iron ore.
Meanwhile, the local steel and iron ore producer CSN announced plans to increase iron ore production to 108 million mt per year, from today’s 33 million mt per year. Although received with a dose of skepticism, the statement has negatively affected the sentiment that the supply/demand balance of iron ore could remain favorable to the miners in the medium term, as demand growth remains exceeding iron ore production capacity.
Preliminary indications from the Brazilian customs remain pointing to an increase in September from the 31.33 million mt of combined iron ore and pellets exported by the country in August.