In-line with Week 23, as spot iron lump premium declines by 17% W-o-W, it further declined by around 4.3% and reached to USD 0.154/DMT in Week 24.
Premium is down by USD 0.007/DMT, CFR China. Cooling steel market hits spot lump and pellet market in China.
In week 24, lump supply remained strong throughout the week and steel prices had failed to rebound, leading to declining spot lump premiums. In addition, the declining steel prices in China continue to remain a discouraging factor for steel mills to use higher grade raw material.
Meanwhile, restriction on usage of sinter in Tangshan city between 14 June-21 June’16 in order to improve air quality, will again lead to a shift in the buying pattern of steel mills. Mills will again turn back to use lump to feed their steel mills. This restriction in Tangshan would support the lump premium in the coming term as they cant use sinter fines.
Pellet premium remains stable
In week 24, spot pellet premium continuous to remain stable at USD 21/DMT, CFR China for Fe 65% BF grade pellets.
In China, the supply of lower grade pellet were readily available at port stock. Chinese mills are preferring low-grade Indian pellets. Demand for high-grade Indian pellet is still under pressure amid sluggish steel prices.
The Chinese market is still finding a balance between pellet and iron ore lumps. Usage of lumps are quite economical but the use of low-grade pellet may also remain competitive.
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