PRICING NOTICE: Fastmarkets will publish implied blast furnace pellet premium over 65% Fe index

Following a shift to the 65% Fe fines index as the base price for some pellet contracts, Fastmarkets will begin publishing an implied spot blast furnace pellet premium over its MB 65% Fe Brazilian Iron Ore Index alongside the existing implied premium over its 62% Fe index.

Fastmarkets will publish both implied premiums from April 5 – the first Friday of 2019’s second quarter.

The implied spot pellet premiums are weekly figures obtained by calculating the differentials between the Fastmarkets MB 65% Fe Blast Furnace Pellet Index and the weekly average of the Fastmarkets MB 62% Fe Iron Ore Index or the Fastmarkets MB 65% Fe Brazilian Iron Ore Index respectively. All of these indices are calculated on a cfr Qingdao basis.

They are intended to provide an indication of the pellet premium over a 62% Fe or a 65% Fe fines index, based on cfr China spot market transactions involving blast furnace pellets.

The decision to publish an implied pellet premium over the 65% Fe fines index as well as over the 62% Fe fines follows a move by the industry to shift the base price for many pellet contracts to the higher-grade fines index. The shift from a 62% Fe to a 65% Fe index base price was first indicated by Vale during its investor day at the New York Stock Exchange in early December.

Several other pellet producers subsequently signaled their intention to follow suit.

Delegates at the recent Fastmarkets China Iron Ore conference in Beijing also cited the launch of the Singapore Exchange’s high-grade derivatives as one of the factors supporting the change in pricing basis.

To provide feedback on Fastmarkets iron ore indices, or if you would like to provide price information by becoming a data submitter, please contact Peter Hannah by email at: pricing@fastmarkets.com. Please add the subject heading FAO: Peter Hannah, re: iron ore pellet.

To see all of Fastmarkets’ pricing methodology and specification documents, go to https://www.metalbulletin.com/prices/pricing-methodology.html.

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