China iron ore pellet: Demand dries up

Seaborne pellet prices fell sharply this week as more steel mills preferred lump as the choice of direct charge material in the furnace burden.

The Argus 64pc Fe, 3pc Al pellet was assessed at $105/dry metric tonne (dmt) this week, down by $9.50/dmt from last week. The 2pc Al was assessed at $107.5/dmt, down by $9/dmt from a week ago.

Offers for Indian-origin BRPL cargoes were at $109/dmt and $111/dmt. An offer for Indian-origin Jindal pellet cargo was at $110/dmt. Bids for Indian cargoes were at $105/dmt and $108/dmt. A cargo of Ardent Indian pellet was offered at $111/dmt on 24 August.

An Indian pellet cargo was sold today in Jingtang at Yn920/wmt, or a seaborne equivalent of $113.55/dmt.

Indian pellet was sold at Yn940/wmt and Yn965/wmt in Tangshan on 22 August and Yn950/wmt in Tangshan on 23 August.

A Jindal pellet cargo was offered today at Yn935/wmt in Rizhao port.

Pellet cargoes in portside markets are likely to retain the current premium on seaborne prices as mills will keep buying smaller lots in the yuan-based markets. But the higher portside premium is not encouraging trading firms from booking fresh seaborne cargoes as they wait for the market to bottom out.

Smaller Indian exporters may exit the market as prices inch towards $100/dmt. A domestic transaction between a large pellet producer and a key steel producer in east India was done at around $98/dmt earlier this month. Indian pellet producers prefer selling domestically as payment for cargoes is nearly instant, while quality checks are much less stringent than for exports. Offers from the central Indian state of Chhattisgarh, the second-largest iron ore producer state, may be the quickest to disappear from export markets as logistics costs are considerably higher than in Odisha, the largest iron ore producer state in India.