In Week 23, spot iron lump premium drops down by 17.4% W-o-W and assessed at USD 0.161/DMT, which was at USD 0.195/DMT in Week 22.
Premium has increased continuously from Oct’15 till mid-May’16, after which it started declining. Earlier, spot lump premium continuously increased as margins were good for lumps, pellet and concentrates. But, now, as mills are not preferring to buy the material, margins are getting thin.
In one of the major steel producing province namely Tangshan, due to environmental concerns, the government restricted the use of sinter fines (one of the major cause of pollution) and enhance the use of high-grade material (lumps and pellets) while manufacturing steel. But, now as the mills have again started using sinter fines for producing steel, it has impacted spot lump premium to move down.
Alongside, lump supply from ports remained unchanged in Week 23. The stock of lump cargoes was recorded at 10.95 MnT on 03 June’16, remained almost stable at 11 MnT from last week (on 27 May’16).
Pellet premium remains stable at USD 21/DMT
In week 23, spot lump premium continuous to remain stable at USD 21/DMT, CFR China for Fe 65% BF grade pellets.
In China, pellets of lower specification appeared to remain at an economical alternative for steel mills. Chinese buyers were interested in purchasing Indian pellets of lower specifications.
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