In Week 35, pellet premium for Fe 65% BF grade pellet is assessed at USD 31.2/DMT. Pellet premium is holding lasts at an upward trend. In Week 34, the premium was assessed at USD 31/DMT.
Since, Oct’15, pellet premium moving up continuously on following grounds:
- Chinese steel mills are increasing use of pellet or lumps instead of sinter fines in view of steel production ramp up and ongoing environmental inspections
- The Chinese market is facing supply shortage when Samarco, a major pellet supplier to the Chinese market, stopped delivering pellets, which supplies around 10-11 MnT pellets to China.
Steel mills are forced to rely on premium-grade materials such as lumps and pellets to meet environmental standards.
It should be noted that pellet premium was usually assessed at around USD 17-18/DMT last year, but now it has hit all time high and reached to a level beyond USD 31/MT.
Pellet inventories at major Chinese ports are at 3.8 MnT in Week 35, down by 5% as it was 4 MnT in Week 34. Seaborne pellet inventories are decreasing continuously.
Spot lump premium at USD 0.191/DMT
In week 35, spot lump premium is assessed at USD 0.191/DMT. Lump premium marginally down by 0.002/DMT W-o-W as it was last assessed at USD 0.193/DMT in Week 34.
Strong profit margins and lump demand have boosted lump premium. Profit margins were healthy as mills opted for productive feed to use it in their mills.
The G20 summit in Hangzhou was also expected to increase demand for lumps and pellets, as usage of sinter fines would likely to reduce or stop. The G20 summit will take place between 31 August to 04 September.
Seaborne lump inventories at Chinese major ports were recorded at 12.15 MnT in week 35, up by 1.6% as it was 12.05 MnT in Week 34.
Leave a Reply