Spot iron lump premium fell marginally by USD 0.0025/dry MT unit W-o-W in this week (i.e. week 47).
Week 47 noticed marginal drop (of 4% W-o-W) in spot iron lump premium. Spot lump premium was assessed at USD 0.0575/dry MT unit for Fe 62%. Last week (week 46) the premium was seen at USD 0.06/dry MT unit.
Amid weak profit margins steel mills in China are adopting cost cutting measures. Sintering fines has become comparatively preferred choice over lump.
Lump and pellets being close substitutes of each other, with latter being processed from pelletizing concentrate material. Cold weather in China obstructs domestic concentrate production. Hence, some market participants are of the view that this might give some support to declining lump premium.
Pellet Premium tumbles to USD 12.25/dry MT
Pellet premium fell by USD 1.25/dry MT W-o-W to USD 12.25/dry MT in this week for Fe 65%.
Struggling with weak steel demand, high grade material is unable to attract buyers.
Pellet premium has been on a downward trend and market participants expect pellet premium to fall in the beginning of 2016. However, the fall in pellet premium might be less than in this year owing to tragic accident at Samarco-a major global direct reduction (DR) pellet supplier in 1st week of Nov’15.
The Brazillian iron ore miner-Samarco has annual production capacity of 30.5 MnT pa pellet and 32 MnT iron ore concentrate.
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