OREANDA-NEWS. Portside iron ore prices mostly traded at a discount to seaborne values in February as steel mills were sufficiently stocked up that curbed portside purchases.

The seaborne equivalent Argus PCX 62pc portside price was at a discount ranging from $1.25-3.70/t for most of the month to the Argus ICX 62pc seaborne price. The PCX traded at a premium to ICX on 1 February and 2 February. Discounts were in a $2.45-3.70/t range for 24 of the 28 days in February.

The yuan-denominated PCX has lagged the pace of gain in US dollar-denominated ICX this month, with PCX increasing by 4.55pc against an 8.8pc growth in the ICX.

In January the PCX-ICX differentials had fluctuated widely with portside prices at a sharper discount of $1.85-3.85/t in the 1-15 January period, with discounts narrowing to 10?-$1.70/t in the second half of the month.

There were fewer trades in seaborne and portside markets during the 15-21 February lunar new year holiday.

Most steel mills had gone on an unprecedented restocking drive from December to mid-January, building up stocks of 30-60 days of iron ore, higher than usual average of 25-27 days. The stocks were in anticipation of a sharp spike in downstream demand for steel products from infrastructure and real estate projects starting March. Steel mills will be mostly resuming normal output after 15 March when winter output restrictions are lifted across north, east and central China.

Since the market opened after the lunar new year holiday, mills have shown reluctance in booking March-delivery cargoes and portside fines as they have sufficient short-term stocks. They are mostly booking April-delivery seaborne cargoes. Some mills are considering putting a part of their March delivery long-term contract cargoes on sale in the seaborne and portside markets.

"Only small mills are buying small volumes at ports. The port inventory is still increasing with arrivals outpacing sales. Mills are in no hurry to buy with an abundance of port stocks," said a Shandong-based trader.

The price differential between portside low grade fines and high-grade fines also widened this month as buying remains focused on high-grade ores to drive productivity amid robust downstream demand. The PCX was at a premium of $32.50/t to the Argus-assessed seaborne equivalent of portside SSF fines on 28 February compared with a $30.90/t premium on 1 February. The differential was the widest for the month at $33.10/t on 23 February.