Spot iron ore lump premiums fell Wednesday as the weak steel market made end-users switch to sintering fines to cut costs.
The Platts weekly assessment of spot lump premium was at $0.12/dry mt unit, down $0.01/dmtu week on week.
Australian miner Rio Tinto was heard to have offered 70,000 mt of 62%-Fe Pilbara Blend lump for spot tendering on a USD/dmtu basis over the October average of Platts 62% Fe IODEX assessments.
This cargo is slated to load October 7-16, according to sources who received the tender.
Another Australian miner BHP Billiton offered 80,000 mt of 63%-Fe Australian Newman Blend lump for spot tendering, on a USD/dmtu basis over the October average of Platts 62% Fe IODEX assessments.
This cargo is slated to load October 1-10, according to sources who received the tender.
The lump spot tenders by both Australian miners were not heard concluded by Wednesday's Asian close.
Sources said demand for lump was falling as cost-wary end-users preferred to stick to cheaper sintering fines.
"There is no new directions to cut down on emission output after the military parade in Beijing, and that explained why lump products are losing popularity as buyers being cash-strapped preferred to use cheaper sintering fines than their lump counterparts," said a steelmaker source in eastern China.
Ahead of a September 3 military parade in Beijing, the government ordered regional steelmakers to cut or shut production to clear the skies.
Concurring that lump product is losing its appeal, a Fujian-based trader said it will be difficult for steelmakers to increase use of lump materials in their furnaces when the steel market is so weak.
Some said growing spot lump supply at the port continues to pressure the seaborne lump market.
"We see a ramp-up in lump supply from the miners this year and there is plentiful supply of lump at the port, no one will be willing to pay more to buy seaborne lump when dockside materials are cheaper," said the Beijing trader.
Source: Platts
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