Diversions pressure iron ore pellet premiums further

Seaborne spot premiums for iron ore pellet have come under further pressure this week from diversions into China, while concentrate premiums are unchanged.

Resales of pellet cargoes by European and northeast Asian steel mills into China are adding to spot supplies to keep prices under pressure. Seaborne spot pellet premiums to the Argus ICX 62pc fines index are around $22.50-24.50/dry metric tonne (dmt) cfr China for Ukrainian 65pc Fe blast furnace pellet, down from $28/dmt in early April.

The 65pc fines index has widened its premium to the ICX index in late April, adding pressure to pellet premiums linked to it. Premiums to the 65pc index are around $8-9/dmt cfr China, down from $16-18/dmt in early April.

A Japanese steel mill sold in a tender yesterday Vale 65.6pc Fe AF11 pellet at $108.90/dmt cfr China. The fluxed pellet with 2.55pc silica and 0.5pc alumina is similar to AF08 quality but not representative of Ukrainian pellet.

Liquidity is limited this week ahead of a 1-5 May holiday in China.

Floating premiums for iron ore concentrate, a pellet feedstock, were flat this week.

Australian concentrate spot premiums were unchanged at $2/dmt above the Argus May 65pc fines index on the back of two Karara concentrate tender results.

A June shipment of Karara concentrate sold at a $2/dmt premium to June 65pc index earlier this week, while 65,000t of Karara concentrate with a 11-20 June laycan sold on the Corex platform today at a $2/dmt premium to June 65pc index.

Ukrainian concentrate spot premiums were unchanged at 50¢/dmt above the Argus June 65pc index.

A cargo of Ukrainian concentrate with an April laycan sold at a 50¢/dmt premium to June 65pc index late last week. A May laycan cargo of Ukrainian concentrate today was offered at a 50¢/dmt premium to July 65pc index off screen.

Australian concentrate cargoes, with a shorter sailing time to China, are indexed against a nearer month than Ukrainian cargoes.

Portside trade in China yesterday saw Ukrainian concentrate sold at 758 yuan/wet metric tonne (wmt) and Yn760/wmt at Lanshan port in Shandong. Chilean concentrate sold yesterday at Yn854/wmt at Lianyungang.

By Chris Newman, Kitty Xie, China staff

source: Argus Media