China iron ore pellet: Prices for Indian cargoes slide

Seaborne iron ore pellet prices in China slipped this week, as a sharp decline in seaborne lump prices cut into demand for Indian pellet.

The Argus 64pc Fe 3pc alumina pellet index fell by $2.50/dry metric tonne (dmt) to $133.50/dmt this week. The differential for 2pc alumina pellet widened by 50¢/dmt to $3.50/dmt.

Seaborne trade remained sluggish for Indian pellet shipments. No deals have been reported since Monday. A cargo of Arya pellet with August loading sold at $133/dmt on 17 July, while a cargo of Monnet pellet with 3pc alumina sold at $135/dmt on 19 July. A cargo of JSPL pellet was offered at $133/dmt by a Chinese trader, but most offers were higher at $134-136/dmt.

A cargo of Indian-origin KIOCL pellet with 2pc alumina was sold at around $124/dmt fob New Mangalore port, equivalent to around $138/dmt on a cfr China basis. A cargo of KIOCL pellet was offered at $138/dmt cfr China on Monday.

The Argus-assessed 62pc lump premium has narrowed by 41pc over the past seven days to 21.60¢/dmtu on the Argus ICX 62pc seaborne fines index. The outright lump price was assessed at $131.60/dmt, close to the pellet price of $133.50/dmt today.

Lump and pellet compete for space as direct-charge material in the furnace burden. While lump can occupy over 30pc of the furnace burden, technical factors limit pellet proportion to at most 15pc of the burden for most Chinese mills.

Pellet usually commands a premium over lump prices since it is a processed iron ore product and consumes less energy in the furnace.

Imported pellet demand is also pressured by higher supply of domestic pellet feed concentrate in the Chinese market, which is raising the use of domestic pellet.

But demand for imported pellet is unlikely to fall off sharply, as emissions-related iron ore fines sintering and pelletising restrictions in north China are likely to intensify with the October celebration of the 70th anniversary of the founding of the People's Republic of China drawing closer.