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Cisa: short-term iron ore prices to stay at US$60 - 70/dry t

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Seaborne iron ore prices will hover in a US$60 - 70/dry t range in the short-term, as higher demand and ample supplies of iron ore continue to balance out each other, said the China iron and steel association Cisa.

Argus Media reports that the Argus ICX price for 62% seaborne fines has moved in a US$63 - 69/dry t range since late March.

Increased shipments of iron ore by major mines this month will increase supply pressure, but steel mills' profits may increase further as downstream demand is expected to remain firm that will support demand and prices of high grade ores. No new environmental restrictions are expected for steel mills this month, although production will be affected by several mills having maintenance shutdowns.

Firm demand for low alumina ores and tight supplies of Brazilian fines sharply widened the price differential between BRBF fines and PB fines. At the end of May, the premium of BRBF fines to the reference 62% index was around US$4/dry t compared with a 50¢/dry t discount to the index for PB fines. The price advantage of PB fines has become apparent that may lead to narrowing of these differentials in the spot market in the short-term, said Cisa.

Prices of domestic pellet feed concentrate increased in May, with ex-Tangshan prices rising by 10 - 20 yuan/dry t (US$1.50 - 3.15/dry t), while mainstream imported fines in Tangshan ports fell by Yn 15/dry t in the same period. Environmental restrictions on domestic mining were eased in May, which lifted capacity utilisation by 2.4% from a month earlier to 63.9%. Inventories with mines fell by 90 000 t in May to 2.34 million t. Demand for high grade domestic concentrate will remain robust in the short-term, while any upside to output is limited.

Overall, imported iron ore stocks with Chinese mills increased in May to 31 days of use compared with 29 days in April, so a further building of stocks from these levels seems unlikely, said Cisa.

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