China iron ore pellet: Prices follow fines lower

Iron ore pellet prices fell by more than 10pc this week, following benchmark 62pc Fe iron ore fines and domestic pellet prices in China lower.

The Argus 64pc Fe, 3pc Al pellet was assessed at $116/dry metric tonne (dmt) this week, down by $13.50/dmt from last week. The 2pc Al variant was assessed at $118.50/dmt, down by $13/dmt from a week ago.

The Argus ICX 62pc fines index fell by nearly 9pc to $89.40/dmt over the same period.

Steep price falls across iron ore markets have muted spot trade for pellet over the past week. Buying interest is weak amid negative outlooks.

A cargo of Indian pellet with 64pc Fe and Al 3pc was offered at $116.50-117/dmt and bid at $115-116/dmt. The lowest offer for KIOCL 2pc pellet was at $120/dmt, although there was an offer higher at $128/dmt with a September laycan.

Domestic pellet prices in China remain around $7-9/dmt lower than seaborne prices after steep falls in domestic concentrate prices. Buyers are still waiting for prices to stabilise and have no intention to buy cargoes yet, even after the significant falls over the past two weeks, because of the risk that prices may fall even further. Steel mills are favouring domestic pellet over imports to reduce price risk.

Imported pellet was offered at Yn940-950/wet metric tonne (wmt) at Shandong port today, trading at Yn940/wmt.

Premiums for iron ore lump have stabilised at above a 16¢/dmt unit level, close to the added sintering costs that iron ore fines require but direct-charge products like lump avoid. Lump demand is low and port inventories are still high, buyer said. PB lump traded at Yn805/wmt at Shandong port today. Mills said they favour pellet over lump at current prices.