Steel Products Prices North America

Iron Ore Being Re-Exported Out of China

June 17, 2014

Novo International Limited i/o Formosa Steel Limited is, to the best of our knowledge, the first Asian iron ore trading company to sell iron ore that had been imported into China and re-sell the ore for export out of China to a non-Chinese destination. Steel Market Update learned about three weeks ago, due to the crisis in the iron ore markets in China and with so many banks holding iron ore as collateral, one of our trading friends was attempting to convince the banks to re-export the ore so they could monetize the inventories. We learned this morning that the first trade has been completed and others will most likely follow.

Steel Market Update received the following email this morning:

Good Day John:

So, it has happened…! We signed a contract for 120,000mts of Ukraine Pellets today for re-export from China. 63.78% Fe on SGS report at discharge and cargo was placed in Bonded Warehouse which means the cargo has not been customs cleared and prompt for re-export. We sold on FOB basis at USD114/mt. We have now been offered 3 other cargos and will keep you posted on developments of those cargos. It goes to show you that “Thinking Ahead, gets you Ahead” especially when everyone was originally asking me if I just exited the Loony Farm/Bin when I proposed the idea 3 weeks back, even the Banks thought I was joking, but those Banks we visited called today and asked if we could meet with them tomorrow. The other 3 cargos being offered are from Domestic companies holding the titles to the cargos.

Rest assured, when this hits the market, every Tom, Dick and Harry will jump on the Bandwagon. At least we already know the clients, the prices, the procedures and have a jump on them.

Novo International Limited i/o Formosa Steel Limited

SMU was advise that the iron ore was sold to a European company for re-export to an not yet know Southeast Asia location.