Seaborne iron ore concentrate, pellet prices depressed by slumping fines

Seaborne iron ore concentrate and pellet prices plunged further in the week ended Friday May 28 amid downward pressure from the bigger fines segment of the market.

Fastmarkets iron ore indices
Pellet premium over 65% Fe fines, cfr China: $61.00 per tonne, down $0.10 per tonne
66% Fe concentrate, cfr Qingdao: $213.91 per tonne, down $30.21 per tonne
65% Fe blast furnace pellet, cfr Qingdao: $279.82 per tonne, down $20.28 per tonne

Key drivers
A call to curb high commodity prices by the Chinese government has largely led to sentiment in the iron ore market deteriorating during the week, putting a lot of pressure on the concentrate and pellets segments, a buyer source in southern China said.

The same source said that the depressed sentiment curtailed demand for both concentrate and pellets and some mills in China were starting to buy on an as-needed basis.

A buyer source in northern China said that some mills were turning to domestic suppliers due to their lower prices in comparison with seaborne cargoes.

Demand for seaborne pellet-feed concentrate was still firm, however, and premiums for these products over 65% Fe indices were largely unchanged from the preceding week, according to the same source.

But buying interest for Indian pellets dropped last week due to the rampant outbreak of Covid-19 in the South Asian country, which has raised concerns among Chinese buyers, according to a second buyer source in southern China.

A Hong Kong-based trader thinks that the recent price volatility in the wider iron ore market has contributed to the weakened demand for pellets.

The trader added that fewer offers of Indian pellets were made in the spot market last week, which he said were largely due to the suspension of several ports in India from Tuesday as a precaution following a cyclone warning. Operations at the suspended ports will likely resume on Monday May 31.

Quote of the week
“The supply of domestic iron ore concentrate in China and seaborne concentrate is sufficient because some steel mills in other countries have stopped pelletizing due to an increase in Covid-19 cases. Therefore, some of these raw materials are being redirected to the Chinese market, which could be another factor contributing to the pressure on seaborne iron ore concentrate prices,” the second buyer source in southern China said.

Trades/offers/bids heard in the market
Concentrate
Spot market, 100,000 tonnes of low-sulfur 65% Fe Ukrainian concentrate, traded at the average of a 65% Fe index for the month after the notice of readiness at the port of discharge, plus a premium of $1.75 per tonne, May loading.

Spot market, 170,000 tonnes of 67.1% Fe Minas Rio Blast Furnace Pellet Feed, offered at the June average of Fastmarkets’ index for iron ore 65% Fe Brazil-origin fines, cfr Qingdao, adjusted for Fe content, plus a premium of $5 per tonne, laycan May 26-June 6.

Spot market, 90,000 tonnes of 64% Fe SMIS Magnetite Pellet Feed, offered at the July average of Fastmarkets’ index for iron ore 65% Fe Brazil-origin fines, cfr Qingdao, plus a premium of $5 per tonne, laycan July 7-15.

Pellets
Spot market, 63% Fe Rashmi pellets, offered at $235 per tonne cfr China, June loading.

Spot market, 65.5% Fe Godavari pellets, offered at around $270-280 per tonne cfr China, July loading.

Spot market, 63% Fe KIOCL pellets, offered at $267 per tonne cfr China, end-May loading.

Spot market, 63% Fe low-alumina Indian pellets, offered at $279 per tonne cfr China, end-May loading.

Zihao Yu in Singapore and Min Li in Shanghai contributed to this report.

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