What’re Factors behind Surging Pellet Premiums in May? Will Price Gain Be Continuing? SMM Reports

SHANGHAI, Jul. 18 (SMM) – Pellet premiums surged in May, and what are major factors behind the surge?

Falling supply and demand increase served as the two major driving forces, SMM concludes. 

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China imported 930,000 tonnes of pellets in May, down 47.75 per cent on a monthly basis, and down 20.45 per cent on a yearly basis. Domestic steel mills, on the other hand, rushed to buy high-quality resources to pursue higher profits, growing the pellet using ratio at mills. The big rise in lump premiums also persuaded some mills to shift to pellet market. 

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Moreover, tight supply of domestic concentrate also grew demand for imported pellet. SMM survey finds that utilization rates at domestic iron mines, which averaged around 51 per cent from January to June, dropped to a first-half’s low in May. 

In July, supply of domestic pellet is expected to grow with production resumption at some large pellet producers, which shut down in June for unit maintenance. Hence, SMM expects pellet premiums to fall back slightly. 

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