China iron ore pellet: Prices gain on demand

Seaborne pellet prices rose over the last week, driven by robust demand and gains in 62pc and 65pc fines indexes.

The Argus 64pc Fe, 3pc Al pellet was assessed at $117/dry metric tonne (dmt) this week, up by $2/dmt from last week. The 2pc Al price was assessed at $120.50/dmt. The premium between 2pc and 3pc Al pellet was flat from last week at $3.50/dmt.

Four deals were concluded during the assessment week. A cargo of BRPL Indian pellet with January delivery was heard done at $117/dmt on 6 January. A similar BRPL cargo was sold at $116.80/dmt on 3 January. A Chinese steel mill purchased an early-January delivery cargo of BRPL at a premium of $20/dmt to the January 62pc index. A cargo of 65pc Russian pellet with 0.25pc Al was done at $124/dmt late last week.

Indian iron ore pellet producers reported bids for January-loading and February delivery cargoes at $116-117/dmt but strong domestic demand in India are pushing producers to sell closer to $120/dmt.

Portside pellet prices also gained. A deal for Indian pellet with 3pc Al was done at Yn970/wmt (seaborne equivalent of $123/dmt) and one for KIOCL pellet was done at Yn1,020/wmt at Shandong port on 7 January. A deal for BRPL pellet concluded at Yn980/wmt at Caofeidian port on 6 January.

Restrictions on pelletising and sintering in key steelmaking cities such as Tangshan have pushed mills to buy imported pellet rather than pelletise concentrate at their mills. The restrictions are part of emissions control measures that were imposed from mid-December.

A few south China-based mills enquired actively on seaborne cargoes this week. Pellet demand is expected to remain supported in the near-term as sintering and pelletising restrictions are imposed when pollution alerts are issued.