Brazilian steel producers receive discount on pellet prices

A major steelmaker in Brazil told SteelOrbis that the local miner Vale has granted a 20 percent discount on the price of iron ore pellets of the blast furnace grade to its domestic clients.
With the discount, the integrated steel producers are now paying for pellets $60/mt, CFR, no taxes included, comparable to $75/mt in early December.

According to the source, the lower price reflects not only the reduction in the price of all iron ore products in the international markets, but also the particularities of the pellets, which are highly demanded in times of high steel prices, helping to increase production, but when steel prices are low, like today, the consumption of pellets in blast furnaces can be reduced or even suspended, maintaining the BF charge with sinter and lumps.

The source mentioned that the company is still using pellets in BF’s, but at a very low rate, chiefly when compared to times of high demand for steel, when the pellet rate can exceed 300kg per ton of hot metal produced.

In December, Vale exported 2.76 million mt of pellets at $45.71/mt, while Samarco exported 3.53 million mt of the product at $74.14/mt, both FOB conditions. Vale usually declares an interim price for exports, to be complemented when the shipment arrives at destination.