Iron ore pellet demand remains strong in China

Tangshan has imposed a near-total halt on pelletising and sintering operations indefinitely to reduce emissions. Mills will have to increase the proportion of direct-charge feed in the blast furnace to maintain output at high rates if the suspensions last for more than a few days.

"We are stocking up less fines but more lump and pellet due to the restrictions in Tangshan," said the manager of a large Tangshan-based mill.

Production of domestic iron ore concentrate and pellet has been falling in north China because of restrictions on opencast mining, further boosting demand for imported pellet.

China's steel market is undergoing a longer-term shift to pellet as a preferred blast furnace feed. "China continues to try to be a first-world superpower, and first-world superpowers do not pollute to produce steel," Lourenco Goncalves, Chief Executive at US-based iron ore producer Cliffs, said last week. "So long story short, the shift toward higher grade is there to stay. The shift toward pellets is there to stay."

The pellet premium in China has risen from US$18/dry t to US$62.5/dry t over a short period, Goncalves said.

There were rare offers of Iranian-origin pellet in China's seaborne market this week. More Iranian cargoes are likely to find their way to China after Tehran removed a 5% export duty on pellet.

Iranian 65% pellet with average 1% ferrous oxide and 0.08% sulfur was offered at US$126/dry t cfr China. Another offer for 64% Iranian pellet with 1.8% alumina and 0.02% sulfur with late July loading dates was made yesterday at US$142/dry t, but the seller cut the offer price to $132/dry t earlier on 24 July.

Indian pellet remains more popular in China, given it is the most widely available in the spot market. Ukraine-origin pellet is mostly sold through long-term contracts, with fewer cargoes in the spot market. Ukraine-origin pellet cargoes are being offered around US$10/dry t higher than Indian pellet, said the manager of a Ukraine-based mining company.

A cargo of high alumina, 64% Indian pellet was sold at US$118.50/dry t last week.

A vessel carrying 50 000 t of iron ore pellet from India's Jindal Steel for export to China is waiting for a berth at Paradip port on India's east coast. Fellow Indian pellet producer BRPL shipped 58 485 t of pellet to China last week from Paradip. Indian pellet exports to China are done entirely through the spot market.

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