The price spread between Brazilian high iron content Iron Ore Carajas (IOCJ) and seaborne medium brand fines has been bogged down by sluggish demand fundamentals amid diminished mill margins, higher portside stocks in China and limited support for Brazil's export prices despite the rainy season, market sources told S&P Global Commodity Insights Sept. 8.
While the Platts Iron Ore Index, or IODEX, approaches the $120/dmt CFR China level, the spread with the high Fe 65% material has narrowed significantly in recent days to over a three-year low on the back of poor buying interest for delivered cargoes in the two to eight weeks forward window from Chinese mills in September.
The 65%-62% Fe spread, typically an indication of a preference for higher 65% Fe content fines compared with the medium 62% Fe fines, fell to multi-year lows Sept. 4 when demand and buying inquiries remained sparse.
The spread was last time narrower Aug. 18, 2020, at $7.85/dmt, S&P Global data showed.
