In Week 27, spot lump premium assessed at USD 0.1655/DMT CFR China W-o-W. Premium moved up marginally by USD 0.005/DMT against last week’s (Week 26) assessment at USD 0.1650/MT DMT, CFR China.
With the resumption of steel production in Tangshan on full fledge which uses sinter as the major raw material for steel production, demand for lump become steady. Lump premium was at parity as compared to the cost of sinter fines.
Domestic lump or concentrate supply was tight as domestic miners could not able to ramp up domestic concentrate production in the face of cheaper imports. Seaborne iron ore fines prices are yet lower than domestic concentrate, making steel makers opt for fines and go for pelletization rather than using lump as raw material.
Sudden increase in global iron ore prices supported premium
Global iron ore prices also moved up last week. Currently, Fe 62% fines prices are at USD 54/MT, CFR China, as on 01 Jul’16, up by around USD 3-4/MT in a week time.
The increase in spot steel prices had supported global iron ore prices. On 01 Jul’16, Chinese domestic billet touched to a level of 2 months high. Currently, domestic billet offers moved up by RMB 70/MT (USD 11) and assessed at RMB 2,100/MT (USD 323). On similar lines, Shanghai rebar prices also moved up.
Pellet premium assessed at USD 22.2/DMT CFR China
In week 27, pellet premium was assessed at USD 22.2/DMT, CFR China for Fe 65% BF grade pellet. It remained stable at USD 22/DMT since 2 months.
Demand for blast furnace pellets remained stronger upon supply shortage of domestic lump or concentrate. Steel makers prefer procuring pellets over domestic lump when the steel margins were weak.
Pellet inventory at Chinese major ports is at 5.60 MnT in Week 27, down by 3.4% as it was 5.80 MnT in Week 26.
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