China’s iron ore pellet demand stays strong

China’s iron ore pellet demand stays strong

China’s iron ore pellet demand stays strong

China’s demand for imported iron ore pellet is likely to remain strong for the near future because of sintering and pelletizing restrictions in the key steelmaking city of Tangshan.

Tangshan has imposed a near-total halt on pelletizing and sintering operations indefinitely to reduce emissions. Mills will have to increase the proportion of direct-charge feed in the blast furnace to maintain output at high rates if the suspensions last for more than a few days.

“We are stocking up less fines but more lump and pellet due to the restrictions in Tangshan,” said the manager of a large Tangshan-based mill.

Production of domestic iron ore concentrate and pellet has been falling in north China because of restrictions on open-pit mining, further boosting demand for imported pellet.

China’s steel market is undergoing a longer-term shift to pellet as a preferred blast furnace feed. “China continues to try to be a first-world superpower, and first-world superpowers do not pollute to produce steel,” Lourenco Goncalves, chief executive at US-based iron ore producer Cliffs, said last week. “So long story short, the shift toward higher grade is there to stay. The shift toward pellets is there to stay.”

The pellet premium in China has risen from $18/dry metric tonne to $62.5/dmt over a short period, Goncalves said.

There were rare offers of Iranian-origin pellet in China’s seaborne market this week. More Iranian cargoes are likely to find their way to China after Tehran removed a 5pc export duty on pellet.

Iranian 65pc pellet with average 1pc ferrous oxide and 0.08pc sulphur was offered at $126/dmt cfr China. Another offer for 64pc Iranian pellet with 1.8pc alumina and 0.02pc sulphur with late-July loading dates was made yesterday at $142/dmt, but the seller cut the offer price to $132/dmt earlier today.

Indian pellet remains more popular in China, given it is the most widely available in the spot market. Ukraine-origin pellet is mostly sold through long-term contracts, with fewer cargoes in the spot market. Ukraine-origin pellet cargoes are being offered around $10/dmt higher than Indian pellet, said the manager of a Ukraine-based mining company.

A cargo of high-alumina, 64pc Indian pellet was sold at $118.50/dmt last week.

A vessel carrying 50,000t of iron ore pellet from India’s Jindal Steel for export to China is waiting for a berth at Paradip port on India’s east coast. Fellow Indian pellet producer BRPL shipped 58,485t of pellet to China last week from Paradip. Indian pellet exports to China are done entirely through the spot market.

Manjula

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