Extended steel production cuts in China’s key steel making city – Tangshan, has resulted in increased demand for iron ore pellets in China.
China’s Ministry had announced plan to cap steel production rates at 50% of capacity during 15th Nov-15th March in heavily polluted cities like Tangshan amid winter heating season. But it has now been proposed to enforce a 10-15% cut in blast furnace capacity for eight more months, until mid-November.
This has resulted in increased demand for high grade material like pellet and lump in China.
According to market participants, a leading Indian pellet manufacturer has concluded pellet export deal for around 50,000 MT to China at around USD 118/MT, CFR.
The spot pellet premium, have witnessed increase of USD 1.30/dmt from USD 38.5/dmt, towards the end of last week to USD 39.80/dmt, as assessed on Wednesday (28th Feb).
Earlier in 2nd week of February, an Indian pellet maker concluded a deal of 50,000 MT pellets to China at around USD 116/MT, CFR China.
The end of New Year Holidays in China, has brought about increasing interest in exports from Indian manufacturers. The New Year holidays from 15th Feb-to 21st Feb witnessed dull market. The buying is expected to resume due to end of production curbs i.e by mid march and initiation of extreme construction activities season in March. Besides, the enforcement of stricter environmental norms by Chinese government, followed by rising lump premium, and growing coke prices, is rendering buyers to shift towards cost effective materials (pellets).
Iron ore fines Fe 62% fines index prices after the New year holidays witnessed a sharp rise to USD 79.95/MT, CFR China, on 26th Feb (beginning of the week) but recorded decline on Wednesday to USD 78.90/MT, CFR on 28th Feb.
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