In Week 29, spot lump premium assessed at USD 0.173/DMT CFR China W-o-W. Premium moved up sharply by USD 0.008/DMT against last week’s (Week 28) assessment at USD 0.165/MT DMT, CFR China.
Production cuts in Tangshan city announced by the Chinese government as well as floods in southern part of China have supported lump premium to moved up further. Steel mills in Tangshan city were ordered to cut output from their sintering units by 50% from 12 Jul and cease entire output between 25 Jul-31 Jul’16.
So, Chinese mills have to rely more on lumps because of the ban on sintering usage, creating demand for lumps. In addition, floods in southern part of China has also forced mills to search for lumps and pellets rather than sinter fines. As during monsoon, moisture causes sinter to become slurry, which is not ideal to be used as blast furnace feed stock, lumps and pellets have strong demand.
Seaborne lump inventories at Chinese major ports were recorded at 11.35 MnT in week 29, up by 3% as it was 11.0 MnT in Week 28.
Pellet premium moved up on strong demand
In week 29, pellet premium for Fe 64% BF grade pellets is assessed at USD 24.5/DMT, CFR China. Pellet premium sharply moved up by USD 1/DMT in a week time against its last week (week 28) assessment at USD 23.5/DMT, CFR China.
As with lumps, pellet demand was strong due to sintering restriction. Chinese steelmakers were seeking for Indian pellets (lower grade). However, the supply of higher grade pellets was heard to be thin.
Pellet inventory at Chinese major ports is at 5 MnT in Week 29, down by 3.8% as it was 5.2 MnT in Week 28. Seaborne pellet inventories are decreasing continuously. In week 27, inventories were recorded at 5.6 MnT.
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