Prices of Indian iron ore pellet rise in China

Indian iron ore pellet prices in the Chinese market increased this month, as mills stepped up purchases of direct-charge material because of environmental restrictions amid tight supply of Indian pellet.

Deals for 64pc Fe Indian pellet in Tangshan were done at 855-875 yuan/wet metric tonne (wmt) this week, up by Yn5-25/wmt from last week. The seaborne-equivalent of the latest prices is $115-121/dry metric tonne (dmt), assuming 5pc moisture and 16pc value-added tax.

Indian pellet prices have also increased at Shandong ports, where a cargo was recently sold at Yn850/wmt.

Demand for imported pellet has increased because of frequent restrictions imposed on iron ore fines sintering, especially in north China, in an attempt to control emissions. And mills in north China currently prefer Indian pellet because of its 64pc Fe content, higher than the 63pc Fe content in domestic pellet, as well as because of higher prices of domestic pellet in China.

Offer prices of seaborne Indian pellet are also increasing because of a shortage of pellet in India as monsoon rains affect mining. Prices of domestic pellet in Odisha, the country's largest iron ore producing state, increased by around 14pc from a month earlier to 6,200 rupees/t ($91/t) on 18 June, domestic brokerage Motilal Oswal Securities said. The monsoon season runs from June-September but peaks in July and August, so domestic pellet prices may rise further.

Most spot pellet supplies available in China are of Indian origin. India's pellet exports to China increased by 5.65pc from a year earlier to 9.34mn t in the financial year that ended 31 March.

A Shanghai-based trader received an offer of 62pc Indian pellet with June loading dates at $110/dmt. Indian pellet typically sells on a 64pc Fe basis.

Offer prices of low-alumina Indian pellet are higher than for pellet with 3pc or higher alumina content, as a shortage of low-alumina ores boosts premiums of nearly all grades of low-alumina ores in China, such as BRBF fines, Assmang fines and IOCJ fines. A cargo of 64pc Indian pellet with 3pc alumina was offered at $107.5-108/t, while a similar cargo with 2pc alumina was offered at $120/t earlier this month.