The ferrous complex was weak again on September 2, 2021 as spot fell more and paper held on:
There is now an iron ore glut. It is everywhere you look. FMG grade discounts are blowing out:
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As iron ore prices have fallen from record highs, Fortescue Metals Group (ASX:FMG) has seen the return of significant grade discounts for its lower grade iron ore. Around 28-30% of that product RBC says is made up of a ~56% super special fines mix with high levels of impurities like alumina and silica.
After cutting its discount to 84% of the benchmark 62% fines price in the June Quarter, FMG has seen discounts blow out to more than 20% in August. There are additional concerns for lower grade iron ore producers, Peker and de Vries said, as lower grade ores require more of the increasingly pricey coking coal to produce crude steel in the blast furnace refining process.
Vale is discounting pellets:
Brazilian miner Vale has cut its premiums for blast furnace (BF) and direct-reduced (DR) iron ore pellets for the fourth quarter of 2021 amid weaker market conditions and reduced demand from key buyers in Asia and Europe.
Vale settled its BF pellet premium for the fourth quarter of 2021 at $47 per tonne, sources told Fastmarkets – down $15 per tonne compared with the third-quarter premium of $62 per tonne.
Formerly red hot India can’t give away its ore anymore.
Suddenly, there’s a global glut of dirt because:
- property demand in China is sliding fast;
- enabling steel output cuts that are shoving weakness back up the supply chain;
- which is overflowing with new ore.
To clear the glut the price must fall to the highest cost marginal production and that is below $100.
We are going there with a bullet.
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