Spot iron lump premium in week 25 moved up by 4% W-o-W. Lump premium was assessed at USD 0.16/DMT, CFR China in this week against its previous week’s assessment of USD 0.154/DMT, CFR China.
Tangshan – the steel making hub in Hebei province of China accounts for nearly more than 20% of China’s steel output. The steel mills in the city were ordered to restrict sinter usage to cut air pollution levels during 14 Jun’16-19 Jun’16. As per report, the operating rates of steel mills in Tangshan fell to 50%.
Mandatory sintering output cuts forced the steel mills to go for lump. However the rise in lump premium is expected to be short termed and premium will fall after the ban on sinter usage is removed.
Trade-wise:
BHP Billiton sold 90,000 MT Fe 63% Newman blend lump at a premium of USD 0.1658/DMT, CFR China to Jul’16 average of iron ore index. The cargo will load from 26 Jun’16-5 Jul’16
Pellet premium stable at USD 21.5/DMT, CFR China
Spot pellet premium for Fe 65% pellets was assesed at USD 21.5/DMT, CFR China in week 25. Premium remained unchanged against its previous week’s assessment.
Prevailing sintering cuts prevented pellet premium from declining. As per reports of market participants, the inquiries for Indian pellets increased in Beijing as it appeared more economical.
It is to be noted that Indian pellet exports to China has increased from 0.05 MnT in Apr’16 to 0.22 MnT in May’16. In Jun’16 (till 11 Jun’16) India has exported 0.27 MnT pellets to China. As per sources pellet exports from India are expected to remain high in Jun’& Jul’16. Sources shared that recent pellet export deals from India have been concluded in the range of USD 60-65/MT, FoB India.
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