Ex-India iron ore pellet prices showed volatility and sharp fluctuations during the past week, but have recovered by the end of the week amid improved trading activity from Chinese buyers and stronger steel prices, SteelOrbis has learned from trade and industry circles on Friday, April 2.
Sources said that a few limited trades early in the week were reported at prices of around $210-212/mt CFR China, a shade below $215-220/mt CFR a week ago, but prices bounced back higher to close the week at levels of $220-222/mt CFR as buyers became optimistic from the recovery in steel prices and reports of at least some Chinese blast furnaces increasing capacity utilizations and a drawdown in port stocks.
Sources said that the initial depressed prices were largely owing to buyers limiting their trades to meet the immediate requirements of Chinese steel mills amid production cuts in the Tangshan region. The number of trades and the volumes were low from the buyers’ side, while sellers were not interested in cutting offer levels to push volumes.
However, pellet prices recovered amid reports of lower stocks at Chinese ports and some Chinese blast furnaces increased production by increasing the charges of pellets and keeping sintering operations at low levels, triggering fresh buying towards the close of the week.
A pellet producing plant of an Essel Mining affiliate reported an early week trade of a small tonnage of 15,000 mt at a price of around $212/mt CFR China, but reported a higher volume deal of around 30,000 mt of high grade pellet with alumina content of less than three percent at a sharply improved realization of $220/mt CFR later in the week.
Brahmani River Pellets Limited (BRPL), which sources said had stayed away from lower levels bids early in the week, successfully closed a trade for 30,000 mt at around $222/mt CFR for high grade pellets with alumina content of less than two percent, sources said.
“Production restrictions on Chinese steel mills are becoming clearer. We learn that restrictions on sintering have been imposed on 23 steel mills effective until December. This augurs well as blast furnace charging will depend on pellets and hence higher demand will be sustained,” a member of the Pellet Manufacturers’ Association of India (PMAI) said.
“As result, blended fines prices are lower, providing indirect support to alternatives like concentrates and pellets. But our assessment is that trading volumes will remain muted as no mill will get into aggressive restocking and build raw material inventories. Under these circumstances, we expect prices to move in narrow range in the near and medium term,” he added.