After five weeks of strengthening, seaborne lump premiums softened once again as buying dissipated and cargoes could not find homes as easily.
The Platts weekly assessment of spot lump premium was made at $0.1375/dry mt unit, down $0.013/dmtu week-on-week.
"The lump premium was low enough earlier for some buying to take place among the mills, but it has slowed down now as premiums climbed to current levels," a source at a large mill in eastern China said. "Port stock cargoes of lump are also not as popular as before and prices are falling accordingly."
"Lump demand is also softening along with fines today," a Zhejiang-based trader said. "The premiums pushed up too much and too fast and seasonally, there isn't much reason for the premiums to hold at such high levels, unlike in wintertime for example."
Sources also said buying interest for imported lump was sliding as Chinese end-users were struggling with poor steel margins.
"The lump premiums rose too fast so cost-conscious end-users prefer to use cheaper alternatives such as sintering fines for their blast furnace needs," said a Singapore-based trader.
Ahead of the confirmed period of production cuts and shutdowns among northern Chinese mills commencing August 28, steelmakers still appeared to be able to sinter a significant quantity of fines.
Since high lump premiums make that the more cost-competitive option, some mills have appeared to prefer to continue depending on more fines material instead.
Sintering has long been regarded as the most polluting in the whole steelmaking process.
Despite stricter environmental scrutiny from the government requiring many mills to purchase higher quality raw material to ensure they kept to emissions control levels, a Shanghai-based trader said many end-users had already purchased sufficient lump material for their production needs.
There was then no longer a pressing need to raise lump procurement as urgently as in previous weeks, especially since steel prices continued to show little sign of recovery in the short run.
Australian miner Rio Tinto was heard to have offered 62.5% Fe basis Pilbara Blend lump on globalORE at $0.155/dmtu CFR Qingdao over the September average of Platts 62% Fe IODEX assessments, sources informed by the miner said.
The 70,000 mt cargo was offered on the platform with a full-month September delivery period, but sources said the actual laycan dates were September 2-11.
Rio Tinto initially offered the PB lump cargo at $0.16/dmtu CFR Qingdao over the September IODEX before lowering it.
This should have been the same cargo that Rio Tinto had offered through a spot tender Tuesday, but that it had not managed to conclude then.
The counterbid was very far away at $0.051/dmtu CFR Qingdao over the September IODEX.
Brazilian miner Vale was heard to have sold 61.94% Fe Lump Ore Non Screened Tubarao Wednesday in a spot tender, sources who received the tender said.
The LONT cargo was sold at plus $5.01/dmt CFR China to the average of Platts 62% Fe IODEX assessments for the month after the month stated in the Notice of Readiness at the discharge port, with price adjustments for iron content.
The 31,944 mt LONT cargo will pass Singapore September 14, and contained 1.6% alumina, 4.78% silica, 0.102% phosphorus, 0.131% manganese and 6.8% moisture.
With it taking approximately seven days for a cargo to reach north China from Singapore, the approximate arrival date of the LONT shipment is September 21, making October the month after the NOR.
Source: Platts
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