In Week 33, pellet premium for Fe 65% BF grade pellets is assessed at USD 31/DMT. Pellet premium has crossed the level of all time high.
Premium has moved up by USD 2/DMT, W-o-W. In Week 31, it was assessed at USD 29/DMT. Strong profit margins have boosted pellet premium.
Strong demand for pellets has also moved premium further up. Due to ongoing environmental inspection going in various provinces and restriction on using sinter as a feed material, pellets demand is increasing in China.
Steel mills are forced to rely on premium-grade materials such as lumps and pellets to meet environmental standards.
Alongside, other high-grade material alternatives, such as 65% Carajas fines and pellets were also short in supply which further supported lump and pellet demand in China.
Since, Oct’15, Pellet premium have moved up sharply. Staring 2016, pellet premium was assessed at the level of 10-11/DMT and now premium had touched to a level of USD 31/DMT.
Pellet inventory at Chinese major ports is at 4 MnT in Week 33, down by 4.7% as it was 4.2 MnT in Week 32. Seaborne pellet inventories are decreasing continuously. In week 31, inventories were recorded at 4.60 MnT.
Spot lump premium also moved up at USD 0.193/DMT
In week 33, spot lump premium is assessed at USD 0.193/DMT. Lump premium moved up by 0.003/DMT W-o-W as it was last assessed at USD 0.190/DMT in Week 32.
Strong profit margins and lump demand have boosted lump premium. Profit margins were healthy as mills opted for productive feed to use it in their mills.
Th G20 summit in Hangzhou was also expected to increase demand for lumps and pellets, as usage of sinter fines would likely to reduce or stop. The G20 summit will take place between 31 August to 04 September.
Market participants also believed that lump premium may soon hit its peak id steel margins and fines prices fail to increase.
Seaborne lump inventories at Chinese major ports were recorded at 12.25 MnT in week 33, up by 1.6% as it was 12.05 MnT in Week 33.
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