BF grade pellet premium has moved up on recent deals concluded by Indian pellet manufacturers. According to recent tender concluded by Jindal Steel and Power for 50,000 MT pellets, premium paid over iron ore fines has hit USD 54.7/MT, CFR China which was hovering at USD 44-45/MT, CFR.
Jindal Steel’s 64% Fe pellet export tender fetched highest bid at around USD 118.5/MT CFR China for November delivery, against which iron ore fines prices for 62% are at USD 61-62/MT CFR China.
Another pellet maker heard to have concluded a deal at USD 117/MT CFR China.
Key reasons for rising pellet premium
1. Restrictions imposed by Chinese government for steel, pellet and sinter production in key steel producing regions to curb pollution. This has increased demand for high grade lumps and pellets
2. Steel margins with Chinese steel makers are quite handsome, no one wants to compromise with production by using low grade ore
3. Absence of Brazilian pellet as Samarco’s is out of the market since 2016. It recorded pellet production of 12.31 MnT pellets in 2015.
4. China imported around 11.34 MnT of pellet during Jan-Aug 2017, out of which imports from India stood at 5.25 MnT.
5. Indian pellets are gaining popularity in Chinese market. Indian pellet exports during Jan-Sep recorded at 6.75 MnT.
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