The STC tender closed June 22 with offered prices dramatically lower than expected. In the run up to the tender, industry sources were predicting offers of $315-$320/mt CFR. Instead, the lowest offer with 140,000 mt came from Ameropa at $303.33/mt CFR. Ameropa offered an optional 140,000 mt at the same price.
Rounding out the bottom five offers were:
- Rare Earth, 150,000 mt for $303.43/mt CFR
- Transglobe, 270,000 mt for $304.10/mt CFR
- Dreymore, 360,000 mt for $311.11/mt CFR
- Blue Debbaj, 150,000 mt for $311.44/mt CFR
All told the lowest five companies offered 1.07 million mt.
The standard pattern would be for STC to use the Ameropa price as the basis for the other companies to match. The tender documents called for all offers to be valid through July 28.
The last tender run by MMTC netted India just a little more than 1 million mt. In the lead up to the tender closing, traders were speculating that STC would also take another million tons, leaving open the possibility of another tender soon from IPL.
The prices offered will push the global prices down even further. Chinese material in the offers could have a netback in the $280s/mt FOB, significantly lower than the $300/mt FOB cited just last week.
Iranian material would have a netback in the low-$280s/mt FOB.
An award from this tender will put more pressure on Yuzhnyy and Arab producers to lower their prices. The CIS producers have already indicated they would prefer extended turnarounds rather than lower their prices further.