[iron ore analysis] lump premium continues to rise under pressure

The lump premium, which has fluctuated around $0.18 since late March, continues to rise under pressure and may continue to fluctuate narrowly in the short term.

On the supply side, the current port block inventory rose by more than 20% from the beginning of the year, and supply pressure dampened the rise in the lump premium.

A steel company in North China said that the proportion of lump ore has increased slightly to 10% in the near future, mainly considering the following two points: first, its own sintering and shaft furnace production restrictions have not been completely lifted; second, due to the rapid decline in recent profits, the lump ore has been increased to reduce costs. However, due to the increased demand for lump ore, the price difference of powder block has continued to widen since the beginning of the year, resulting in a decrease in the willingness of steel mills to continue to increase lump ore.

A steel company in central China said that because the current production restrictions have been basically lifted, the enterprise pelletizing plant has also resumed normal production, sintering and pellets are relatively abundant, for the time being do not consider increasing the proportion of lump ore.

At the same time, SMM learned that since steel mill profits began to climb last year, some pellet mills in eastern, northern, northeast and central China have been opened one after another, and the supply of pellets has gradually been abundant. However, under the premise of ensuring output, some steel mills still prefer high-quality pellets, and there is little room for improvement for the time being.

In addition, considering the late seasonal rainy season in South China and East China, the difficulty of block ore screening increases, steel mills may reduce the use of block ore, which is not conducive to the rise of lump ore premium.