Iron Ore Prices in China Seen Spurring Demand for Import Cargoes
Time：2013-02-26
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Domestic supply is about 50 cents a metric ton more expensive than cargoes shipped to Tianjin, a port in the north east of the country, the first time since Dec. 10 it’s been higher, the Oslo-based investment bank said in an e-mailed report today. The so-called arbitrage determines how profitable it is for traders to buy from overseas, Platou said.
“A further widening of the arbitrage will be positive for seaborne demand and could lift Capesize rates ahead,” Platou said. Capesizes, the biggest dry-bulk vessels, carry about 90 percent of seaborne iron ore.
Imported ore with 62 percent iron content, which rose to the highest since October 2011 on Feb. 20, slid 1.1 percent to $151.90 per dry metric ton today, its third consecutive retreat, according to the The Steel Index. Locally produced ore with the equivalent iron content rose $146.89 on Feb. 22 from $142.35 on Feb. 4, data from Beijing Antaike Information Development Co. compiled by Bloomberg show.
The supply of spot iron ore has been restricted because the largest miners are selling a higher proportion of cargoes under long-term contracts to the largest steel mills in China, Macquarie Research said in a Feb. 22 report. Prices gained even as smaller mills curbed inventories and output amid uncertain construction demand for steel, the biggest driver for iron ore buying, the investment bank said.
Capesize Rates Slump
About 100 million tons a year of domestic ore supply will return to the Chinese market from March as mines restart to take advantage of higher local prices, the bank estimated.