Brazilian iron ore producer Samarco is targeting Europe and the Middle East in its first pellet sales for five years, as those markets are willing to pay higher than China.
Customers are heard paying pellet premiums of $41-42/dry metric tonne (dmt) above a 65pc fines index in first-quarter 2021 contracts, a Shanghai trader said. "The premium may be around $1-2/dmt higher than into the China market."
The joint venture owned by mining firms Vale and BHP restarted pellet production in December. It is ramping up to 8mn t/yr, with 1mn-2mn t production in January-June for BHP. A fatal tailings dam accident halted operations in 2015.
The contract price levels are similar to prices in other contracts and in China's spot markets.
Vale settled its current quarter contracts at $40/dmt for blast furnace-grade pellet and $46.30/dmt for direct reduction-grade pellet over a 65pc Fe index.
A mid-December loading 82,000t Ferrexpo Ukrainian Premium Pellet (FPP) cargo was offered into China at a premium of $42/dmt to a February 65pc index yesterday. That is up from a $25/dmt premium for FPP in its debut trade on the Globalore platform in November. The company's first-quarter contract premium to China was heard at $40/dmt above a 65pc index.
The indicative bid for Ukrainian pellet was at $40-43/dmt above a 65pc index this week, a narrower range from $40-45/dmt last week. A cargo of Brazilian pellet traded at 1,645 yuan/wet metric tonne (wmt) ($255/wmt) on 19 December, while Mexican pellet was offered at Yn1,680/wmt and Yn1,700/wmt at Rizhao yesterday.
