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Quarterly iron ore pellet premiums settle lower

  • Spanish Market: Metals
  • 30/06/20

Quarterly iron ore pellet prices have settled at a lower level compared with the previous quarter, in line with weak demand prospects outside China.

Direct reduction-grade pellet settlements were discussed and settled around $27/dry metric tonne (dmt) basis to the 65pc Fe index, down from around $30-31/dmt settled in the second quarter. Middle East markets were discussing a settlement around $27-29/t basis 65pc Fe index for the third quarter, a market participant told Argus.

But blast furnace-grade pellet premiums were being settled and discussed around $20/dmt, down from above a $25/dmt settlement in the second quarter.

Sentiment among steel mills in Europe remains bearish in the aftermath of the Covid-19 lockdowns across the region. Despite signs of recovery such as service centres in Italy reopening, they are still drawing on accumulated inventories. There continues to be north European mills still considering further production cuts in the third quarter with consumer demand yet to fully return.

Pellet requirements among European mills are mixed. Some had deferred second-quarter volumes, leading to less severe cuts in their third-quarter requirements. But others had taken receipt of all their second-quarter shipments. This will affect their ability to fully accept third-quarter allocations.

Asian market participants are uncertain about resurgent steel demand during July-September, especially for markets like Japan and South Korea, with adequate pellet supplies cited as why they expect lower levels for third-quarter pellet premiums compared with the second quarter.

"Given the narrow spread between lump and pellet prices, it would be unreasonable to accept high pellet prices for term contracts," a buyer from northeast Asia said.

The Argus 62pc Fe lump ore premium was at 10.20¢/dmt unit (dmtu) on 24 June, down from over 30¢/dmtu in early March, the highest level this year. The premium edged up to $10.80¢/dmtu yesterday. The 64pc Fe, 2pc alumina index was at $115.50/t cfr China on 23 June, down from around $121 in early March and lower than $130/t at the end of January, the highest level this year. Markets in China were closed over 25-26 June.

"While spot and term contract prices can have a gap and that is reasonable to expect, the term contract prices should not be too far deviated from current spot levels," an Asian buyer said. Another Asian buyer said that the outlook for steel demand was uncertain, with it difficult to predict whether steel mills in Japan and South Korea will boost production in the third quarter or continue cutting output.

"Steel outlook may be better towards the end of Q3. As for pellet supply, we see loss of demand from Asia, outside China, and Europe alleviating any tightness from Brazilian supply woes," he added.

Brazilian pellet producer Vale had revised its output guidance for this year to 35mn-40mn t, down from a previous estimate of 44mn t, according to its last quarterly update. The revised projections were based on first-quarter production, delays in the return of operations suspended because of a dam collapse last year and the impact of Covid-19.

Pellet stocks ample in China

Rising pellet inventories in China are putting pressure on spot prices, a Shanghai-based trader said about last week's 7.9mn t of stocks at Chinese ports, which increased to 8.4mn t by 26 June.

"A 65pc Fe Ukrainian pellet cargo fetched a premium of $10/dmt to an August 65pc Fe index and I think that is the market level now," the trader said, adding that the narrowing spread between 65pc and 62pc grade iron ore has helped support pellet premiums.

The Chinese market's appetite for pellet premium was much lower than the $20/dmt levels for blast furnace pellet that buyers outside China had agreed, a Singapore-based trader said.

Other spot deals last week included a Ukrainian cargo at a $14/dmt premium to a July 65pc Fe index. A 64.99pc Fe Ukrainian cargo was offered at 1,035 yuan/wet metric tonne at Dongjiakou port on 25 June, while a Russian cargo was offered at the same price at Rizhao port.

Spot pellet supplies to China are predominantly Indian-origin pellet. But this year's weaker demand from mills in Europe, Japan and other regions has seen more European and Brazilian pellet being offered to China.


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18/09/24

US Fed cuts rate by half point, signals more: Update

US Fed cuts rate by half point, signals more: Update

Adds chairman Powell comments, economic projections. Houston, 18 September (Argus) — The US Federal Reserve cut its target interest rate by 50 basis points today, the first rate cut since 2020, with policymakers signaling they expect to make another half-point worth of cuts by the end of 2024. The Fed's Federal Open Market Committee (FOMC) lowered the federal funds rate to 4.75-5pc from the prior range of 5.25-5.5pc, which was a 23-year high. The Fed had kept the target rate unchanged since July 2023 after hiking it for more than a year in the most intense rate-tightening campaign in four decades to quash inflation, which peaked at 9.1pc in mid-2022. "The committee has gained greater confidence that inflation is moving sustainably toward 2pc, and judges that the risks to achieving its employment and inflation goals are roughly in balance," the FOMC said in its statement after the two-day meeting. "Job gains have slowed, and the unemployment rate has moved up but remains low." In their latest economic projections, the Fed board and policymakers expect the target rate range will end 2024 near a midpoint of 4.4pc compared with an end of year midpoint of 5.1pc projected in June, which implies further cuts amounting to 50 basis points by the end of 2024. Policymakers also penciled in another 100 basis points of cuts over the course of 2025. "We're recalibrating policy down over time to a more neutral level and we're moving at the pace that we think is appropriate given developments in the economy," Fed chair Jerome Powell told a press conference after the meeting. "The economy can develop in a way that will cause us to go faster or slower. The US economy is in a good place and our decision today is designed to keep it there." The Fed's economic projections see core Personal Consumption Expenditures inflation — the Fed's favorite measure of inflation — ending 2024 at a median rate of 2.6pc, down from a prior forecast of 2.8pc. Policymakers see core PCE inflation falling to a median of 2.2pc by the end of next year. The outlook for the unemployment rate for the end of 2024 climbed to 4.4pc from 4pc penciled in at the June meeting. Policymakers expect gross domestic product (GDP) growth to end 2024 at an annual 2pc, slightly down from a prior 2.1pc projection. The latest policy meeting comes as the Consumer Price Index (CPI) eased to an annual 2.5pc in August , down from 2.9pc in July, the Labor Department reported on 11 September. Inflation had ticked up to 3.5pc in March from 3.1pc in January, prompting the Fed to turn more cautious about beginning its rate cuts. US job growth has recently slowed sharply, falling to an average 116,000 in the three months through August from 211,000 for the prior three months. The jobless rate rose to 4.3pc in July, the highest in three years, before edging down to 4.2pc in August. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US Fed cuts rate by half point, signals more to come


18/09/24
18/09/24

US Fed cuts rate by half point, signals more to come

Houston, 18 September (Argus) — The US Federal Reserve cut its target interest rate by 50 basis points today, the first rate cut since 2020, with officials signaling they expect to make another half point worth of cuts by the end of 2024. The Fed's Federal Open Market Committee (FOMC) lowered the federal funds rate to 4.75-5pc from the prior range of 5.25-5.5pc, which was a two-decade high. The Fed had kept the target rate unchanged since July 2023 after hiking it for more than a year in the most aggressive increase campaign in four decades to quash inflation, which peaked at 9.1pc in mid-2022. "The committee has gained greater confidence that inflation is moving sustainably toward 2pc and judges that the risks to achieving its employment and inflation goals are roughly in balance," the FOMC said in its statement after the two-day meeting. "Job gains have slowed, and the unemployment rate has moved up but remains low." The Fed board and policymakers, in their latest economic projections, expect the target rate range will end 2024 near a midpoint of 4.4pc compared with an end of year midpoint of 5.1pc projected in June, which implies further cuts amounting to 50 basis points by the end of 2024. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Japan's Tokyo Steel cuts sales prices on weak demand


18/09/24
18/09/24

Japan's Tokyo Steel cuts sales prices on weak demand

Shanghai, 18 September (Argus) — Japan's steel manufacturing firm Tokyo Steel said it will cut domestic steel product prices for October, marking the first full-scale price cut in over four years. The decision was driven by sluggish domestic demand and increased competition from cheaper imported steel products. Tokyo Steel will reduce prices across all product lines starting October, with steel coils and plates dropping by ¥15,000/t, shaped beams by ¥12,000/t, and tubes and deformed bars by ¥10,000/t. The company had maintained stable domestic steel prices for an extended period on the back of the steadier domestic demand and market conditions compared to the more volatile overseas market. The last price cut for deformed bars was in July 2023. Steel sales in Japan were weak during the third quarter, impacted by rising procurement costs for materials, a shortage of construction capacity, and an influx of cheaper steel products from China in the seaborne market, market participants said. A decline in profitability pushed Japanese mills to cut production costs. From 11 July to 14 September, domestic scrap prices at Tokyo Steel's Utsunomiya plant dropped by ¥12,500/t, or 23.8pc. Market sentiment in Japan remains bearish due to economic uncertainty and the strengthening of the Japanese yen. The upcoming adjustments in US monetary policy could add further volatility to exchange rates. "We may see more corrections in the Japanese domestic market," a trade source said. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

July EU HRC imports show 175,000t pullback


17/09/24
17/09/24

July EU HRC imports show 175,000t pullback

London, 17 September (Argus) — EU hot-rolled coil (HRC) imports surpassed 1.5mn t in July — a record high — as importers for the first time faced a cap to the ‘other countries' safeguard quota, which led some to purchase back-up material from other sources. More importantly, official figures show that around 175,000t were pulled back from customs clearing, likely all in Italy, after the initial quota numbers were made available in early July from Egypt, Vietnam, Japan and Taiwan. This leftover amount will likely all be custom-cleared in October, in addition to material that has arrived since July, as market participants expect importers to clear all of their HRC to avoid the risk of retroactive duties, potentially applicable from December. Imports from Taiwan, India, Turkey and Japan in July all surpassed the 200,000t mark each, with total imports from those four origins close to 900,000t, a sharp year-on-year increase. Vietnam saw volumes drop ( see table ), while South Korean imports fell by 75pc on the year to 40,379t and Serbian imports were down by 10pc to 37,437t. Hot-dipped galvanised (HDG) imports were at a record high, topping 750,000t in July, with nearly 30pc of the total from Vietnam. There has been concern in the market that the EU might start an investigation on Vietnamese HDG, as volumes have been on the increase, while suppliers are regularly the lowest-priced in the market. Plate imports were also at a record high, as EU producers are preparing to file for an investigation on some origins. Meanwhile, the increase in imports and the drop in EU demand has led producers to seek export outlets, with EU HRC exports rising on the year and on the month in July to nearly 230,000t, with the bulk going to the UK, US and Turkey. Downstream product exports also increased. By Lora Stoyanova and Colin Richardson July EU HRC imports t July y-o-y ±% Taiwan 227,892.8 8.2 India 225,558.6 134.8 Turkey 223,185.9 255.2 Japan 210,842.9 6.5 Egypt 158,625.7 31.9 Vietnam 144,202.0 -59.5 Ukraine 101,721.2 118.5 Australia 51,784.0 104.4 Saudi Arabia 40,594.8 -36.4 Total 1,565,744.2 9.1 — GTT Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US to impose 25pc tariffs on Chinese critical minerals


13/09/24
13/09/24

US to impose 25pc tariffs on Chinese critical minerals

Houston, 13 September (Argus) — The US plans to impose 25pc tariffs on Chinese minerals including indium, tantalum, chromium, cobalt and tungsten, citing China's efforts to dominate global supply chains, according to the office of the US Trade Representative (USTR). The USTR determined not to exclude any critical minerals from the proposed Section 301 tariffs. The USTR said the concentration of mining and refining capacity of these minerals in China, as well as China's effort to dominate the global supply chains for these minerals, endangers US national security and clean energy goals. The Section 301 tariffs on indium, tantalum, chromium, cobalt, and tungsten will go into effect on 27 September. Tariffs on natural graphite and permanent magnets will go into effect on 1 January 2026. China is the leading producer and exporter of indium, producing an estimated 650t in 2023, about 66pc of the global total, according to the US Geological Survey (USGS). The US imported 219 metric tonnes (t) of unwrought indium in 2023, including 10t from China. So far in 2024 the country has imported 148t, of which 45t originated in China, according to data from the US Commerce Department. Indium is primarily used globally for its electric conductivity in a variety of screens including liquid crystal displays (LCDs) as well as fiber-optic cables and other technical components. US consumption is more focused around solders and specialty alloys. The US imports more tantalum powders, alloys, and metals from China than any other country. The US imported 321t of unwrought tantalum in 2023, including 132t from China and has imported 269t between January and July 2024, including 178t from China. Tantalum is primarily used in high-temperature alloys and capacitors. Although China accounted for only 3.3pc — 79t — of global 2023 mine production, the USGS estimated the country had a world-leading 240,000t of tantalum reserves. Chromium is primarily used in stainless and heat-resistant steels. China is the world's largest producer of ferrochromium and stainless steel. The US imported 103,034t of chromium ores and concentrates in 2023, including just 10t from China. Still, the US did import 9,302t of unwrought chrome metal from China so far in 2024, which accounted for 74pc of total volumes, and US reliance on China for the metal has increased since sanctions forced Russian supplies off the table. Although China does not mine a significant amount of cobalt, it is the world's leading cobalt refiner and consumer. The US imported 18t of cobalt ores and concentrates in 2023, including 11t from China, and imported 11t between January and July 2024, including 6t from China. The US imported 1.6mn contained kilograms (ckg) of tungsten carbides in 2023, including 906,000ckg from China and imported 1mn ckg between January and July 2024, including 491,000ckg from China. Tungsten is primarily used in carbide parts for construction, metalworking, mining, and drilling applications. Tungsten is also used in specialty steel fabrication as well as in electrodes, filaments, and wires for various electrical and electronic products. By Cole Sullivan Critical Mineral Tariffs metric tonnes, t HTS Code Resource Name Imports from China, 2023 Imports from China, 2024 through July 2605.00.00 Cobalt ores and concentrates 11 6 2610.00.00 Chromium ores and concentrates 10 52 2611.00.60 Tungsten concentrates 139 46 2825.90.30 Tungsten oxides 212 19 2841.80.00 Tungstates (wolframates) 0 0 2849.90.30 Tungsten Carbide* 906,375 491,371 8101.10.00 Tungsten, powders 0 0 8103.20.00 Tantalum, unwrought 132 178 8112.92.30 Indium, unwrought; powders 10 45 Source: US Commerce Department *unit of measure is kilograms contained Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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