China iron ore pellet: Prices inch up on tight supply
Seaborne pellet prices rose on the back of tight availability from key supplier India and continued sintering restrictions in some Chinese cities.
The Argus 64pc Fe, 3pc Al pellet price was assessed higher by $1/dry metric tonne at $115/dmt this week. The 2pc Al price was assessed at $118.50/dmt. The premium between 2pc and 3pc Al pellet increased by 50¢/dmt to $3.50/dmt.
No deals were done this week. Offers rose, with a 55,000t BRPL Indian pellet cargo for early January loading offered at $117/dmt. A cargo of JSPL Indian pellet with January loading was offered at $115-116/dmt. An offer for BRPL pellet was heard at $116/dmt.
"There were enquiries from China but we have sold all our January cargoes in the domestic market. I do not expect buying to take place higher than $115/dmt cfr in China for now, while domestic prices are at $118/dmt equivalent," said a senior executive at an east India-based pellet producer. "We will offer February cargoes to China at $118/dmt cfr China next week and gauge market reaction."
India's largest pellet exporter BRPL exported a record 335,007t in December and sold 52,000t in the domestic market.
Portside stocks of pellet in China have fallen sharply this week and are currently at around 4mn t, said Chinese market participants.
Indian pellet with 3pc Al was sold at 950 yuan/wet metric tonne, or a seaborne equivalent of $120/dmt, in Tangshan port on 30 December. A 2pc Al KIOCL cargo sold at Yn980/wmt in Shandong on the same day.
The premium of pellet to lump is widening, as lump demand is growing more slowly than demand for pellet. Tight supply and strong demand for imported pellet may underpin bullish sentiment in the near term.
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