In Week 42, spot pellet premium for BF grade Fe 62% pellets was assessed at USD 30.5/MT, remained stable against Week 41.
After a week-long National holidays, Chinese steel mills were found restocking the raw material amid domestic supply constraints. Although iron ore trade activities were vigorous, pellet premium remained stable. Spot iron ore prices also moved up by USD 3/MT and stood at USD 57/MT, CFR China in week 42.
Pellet inventories at major Chinese ports have also increased by 3.5% W-o-W. Inventories were recorded at 2.7 MnT in Week 42 against 2.8 MnT in Week 41.
Spot lump premium down by USD 0.003/MT
In week 42, spot lump premium is assessed at USD 0.155/DMT. Lump premium was down by USD 0.003/DMT as it was USD 0.158/DMT in Week 41 due to limited trade activities in iron ore lumps.
Chinese mills were using 20-25% of the raw material proportion as lump feed. There was no shortage of lumps in the market.
There were mixed sentiments in the market. Few market participants believed that high met cost prices will support lump premium as mills look to minimize sintering. Few believed that the rising coking coal prices have no effect so far on the lump premium.
Nevertheless, the sinter usage restriction could support lump premium. The restriction is expected to last from 10 Oct-20 Oct’16.
Seaborne lump inventories at Chinese major ports were recorded at 13 MnT in Week 42, up by 0.7% as it was 12.90 MnT in Week 41.
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