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Indian iron ore pellet prices in Chinese market increase

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Dry Bulk,

Argus Media is reporting that Indian iron ore pellet prices in the Chinese market increased this month, as a result of mills increasing their purchases of direct-charge material in reaction to environmental restrictions amid tight supply of Indian pellet.

Deals for 64% Fe Indian pellet in Tangshan were made at between Yn. 855-875 /wet metric tonne (wmt) this week, up by Yn. 5-25/wmt from last week. The seaborne-equivalent of the latest prices is US$115-121/dry metric tonne (dmt), assuming 5% moisture and 16% value-added tax. Indian pellet prices have also increased at Shandong ports, where a cargo was recently sold at Yn. 850/wmt.

Demand for imported pellet has increased due to frequent restrictions being imposed on iron ore fines sintering – particularly in the north of China – in order to control emissions. In addition, mills in north China are currently choosing Indian pellet because of its 64% Fe content – higher than the 63% Fe content in domestic pellet – as well as higher prices of domestic pellet in China.

Offer prices of seaborne Indian pellet are also increasing due to a shortage of pellet in India while the seasonal monsoon rains affect mining. Prices of domestic pellet in Odisha, the country's largest iron ore producing state, increased by approximately 14% from a month earlier to Rs. 6200/t (US$91/t) on 18 June, domestic brokerage Motilal Oswal Securities said. The monsoon season runs from June-September but peaks in July and August, raisining the possibility of further price rises for domestic pellet.

The majority of spot pellet supplies available in China originate from India; pellet exports from India to China increased by 5.65% from a year earlier to 9.34 million t in the financial year that ended 31 March.

A Shanghai-based trader received an offer of 62% Indian pellet with June loading dates at $110/dmt. Indian pellet usually sells on a 64% Fe basis.

Offer prices of low-alumina Indian pellet are greater than those for pellet with 3% or higher alumina content, as a shortage of low-alumina ores boosts premiums of nearly all grades of low-alumina ores in China, including BRBF fines, Assmang fines and IOCJ fines. A cargo of 64% Indian pellet with 3% alumina was offered at US$107.5-108/t, while a similar cargo with 2% alumina was offered at US$120/t earlier this month.

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