With increased iron ore prices in the Chinese spot market, coupled with reduced premium for lumps and pellets and reduced ocean freight rates, the prices for different iron ore products in Brazil are showing varying trends on weekly basis.
Sinter feed fines of 65 percent iron contents are now traded for export from Brazil at $140/mt, the equivalent lumps at $144/mt and the equivalent blast furnace grade pellets at $147/mt, all CFR China conditions, dry basis, against respectively $138/mt, $146/mt and $152/mt last week.
In the Brazilian domestic market, however, reflecting the lower ocean freight rates, those prices are now $115/mt, $119/mt and $122/mt, respectively, dry basis ex-works, no taxes included, against $112/mt, 119/mt and $125/mt last week.
The supply/demand balance in the seaborne iron ore market, estimated at 1.6 billion mt per year, is currently favorable to the iron ore producers, as the demand, chiefly from China, is growing faster than production.
Additionally, iron ore production in Brazil remains subject to different uncertainties, such as the impact of the Covid-19 pandemic in the operations of Vale in the north of the country, or the problems derived from the Brumadinho dam burst last year and its continued impact on both production and exports. Brazil has a historical 25 percent share of the seaborne iron ore market.
In August, Brazil exported 30.10 million mt of iron ore (pellets excluded) and 1.23 million mt of pellets, compared to 32.33 million mt and 1.65 million mt in July.
The main destinations of the iron ore in August were Asia (26.82 million mt, of which 27.48 million mt to China), followed by the Middle East (1.47 million mt) and Europe (1.33 million mt), while smaller volumes were shipped to Mexico, Argentina and Paraguay.
China was also the main destination of the Brazilian pellets (766,000 mt), followed by the US 228,000 mt). Smaller volumes were shipped to Argentina, Trinidad and Tobago and the Netherlands.