China iron ore pellet: Prices flat amid rising demand

Seaborne pellet prices were flat this week, as continuing sintering restrictions in many Chinese cities helped support prices despite a substantial fall in the 62 Fe index in recent days.

The Argus 64pc Fe, 3pc Al pellet price was assessed at $103/dry metric tonne (dmt) this week, unchanged from last week. The 2pc Al price was assessed at $106/dmt. The premium between 2pc and 3pc Al pellet was flat at $3/dmt.

Two deals were heard during the assessment week. A cargo of BRPL Indian pellet was heard transacted at $103/dmt today, while another cargo of BRPL was heard done at $103.50/dmt on 7 November.

There were few offers of 3pc Al Indian pellet in the market. Only one December delivery cargo was offered at $103/dmt. Most other offers were for KIOCL Indian pellet ranging from $109-110/dmt. An offer for a 2pc Al Indian pellet with December delivery was made at $108/dmt, while there was a bid for BRPL at $101.50/dmt today.

The sintering restrictions pushed up the ratio of lump and pellet in the furnace, with mills' margins remaining strong and edging higher. High-quality Brazillian pellet still has a premium to Indian pellet, reflecting its low Al content and high CCS (cold crushing strength) that are required by large mills' bigger furnaces.

Reduced domestic concentrate supply during the winter has pushed up demand for imported concentrate. Prices of import cargoes have increased along with higher premiums. A cargo of low-sulphur Chilean concentrate was sold at a premium of $4.50/dmt on 6 November, while a December Karara concentrate tender was awarded at a premium of $1.50/dmt to long-term buyers last week.

Portside trade for pellet has increased, but prices have stayed largely flat. A cargo of Indian pellet was sold in Tianjin at Yn890/wmt, a seaborne equivalent of $109.50/dmt, while deals were done at Yn870/wmt in Qingdao and Yn890/wmt in Lianyungang on 6 November. Deals were done in Tianjin and Qingdao at Yn870/wmt on 8 November.

Pellet inventory at port is still high. Mills prefer to use lump rather than pellet in the furnace, market participants said.