In Week 46, spot pellet premium for Fe 65% BF grade pellets was assessed at USD 32.5/MT, remained stable against Week 45.
Demand for pellet was intensified as Chinese mills inquired about high-grade feed material which was alternative for the low requirement of coal. In addition, with the onset of the winter season in China, buying interest for pellet will remain firm
Meanwhile, shortage of pellets in Chinese market due to Samarco’s disruption is also keeping pellet premium buoyed. In addition, pellets and iron ore fines market have risen too quickly which made buyers cautious and they are not keen to take any position and currently in wait-an –watch mode to see which direction market moves.
Current offers for Fe 64% BF grade pellets of Indian origin are hovering in the range of USD 96-97/MT, CFR China which included pellet premium of about USD 30-31/MT. Indian pellet exports are continuously exporting high-grade pellets to China due to high pellet premium and better realizations.
Pellet inventories at major Chinese ports were at 2.45 MnT in Week 46, down by 2% as it was 2.4 MnT in Week 45. Seaborne pellet inventories are decreasing continuously.
Spot lump premium also remained steady at USD 0.157/DMT
In Week 46, spot lump premium remained stable at USD 0.157/DMT as compared to previous week.
Iron ore lumps were heard readily available at ports and sellers were looking to offload their material, but Chinese mills were more interested in picking up high-grade fines or pellet cargoes. Overall lumps market was under pressure.
It is to be noted that iron ore lumps require more metallurgical coal than high-grade fines or pellet when introduced into the blast furnace. In this regards, steel mills prefer to take alternate cost effective approaches like procuring high-grade iron ore fines to reduce coal consumption.
Few market sources believed that strengthening pellet market and approaching winter may cause lump premium to hold steady. Alongside, the environmental concern may keep iron ore lump premium stable especially when pollution is at peak during the winter season.
Seaborne lump inventories at Chinese major ports were recorded at 13.80 MnT in Week 46, up by 1.4% as it was 14.00 MnT in Week 45.
Leave a Reply