China iron ore pellet: Prices rise on demand spike

Seaborne pellet prices were higher on the back of seasonal winter stocking of direct-charge materials and profitable steel mills buying more medium- and high-grade iron ore to maintain peak production rates.

The Argus 64pc Fe, 3pc Al pellet was assessed at $114/dry metric tonne (dmt) this week, up by $5/dmt from last week. The 2pc Al was assessed at $117/dmt, also $5/dmt higher. The premium between 2pc and 3pc Al pellet was flat at $3/dmt.

China's domestic pellet concentrate supplies slow in winter as mines suspend operations, increasing demand for imported direct-charge material such as lump and pellet. An increase in steel prices has also lifted mill profits since early November, prompting mills to stock up imported ores to maintain productivity.

A deal for India-origin Rashmi pellet was done at $111/dmt and JSPL pellet was sold at $110.50/dmt on 6 December. A deal for 55,000t of BRPL pellet with 15-24 December loading dates was done yesterday at $114/dmt.

A cargo of low-alumina Indian pellet was traded at $116.50/dmt cfr China on 5 December. A low-alumina KIOCL pellet was sold on 5 December at 960 yuan/wet metric tonne (wmt), or a seaborne equivalent of $120/dmt, at Shandong port.

The main Indian producers are mostly out of December-delivery cargoes and supplying January-delivery cargoes.

A large-scale Indian producer received bids for prompt shipments from Chinese buyers at $113/dmt, while a Malaysian buyer bid at $110/dmt, both on a cfr basis. Trading firms are not keen on booking future cargoes given the price volatility and are more interested in buying prompt shipments that they can sell in the short term, said a senior executive at the company.

An Indian pellet cargo was sold yesterday at Yn935/wmt in Caofedian. A BRPL pellet cargo was offered at Yn960/wmt in Rizhao and Caofeidian, while a JSPL cargo was offered today at Yn940/wmt in Jingtang port.