Pellet Premiums Continued to Fall in April while Lump Premiums Fell after Rising

SHANGHAI, May 11 (SMM) - Despite the peak season, the demand for construction material was lower than expected and steel mills' finished product inventory continued to accumulate. Therefore, steel prices dipped sharply and steel mills' profits deteriorated. The blast furnaces of steel mills in some regions were shut down for maintenance, which dragged down the overall demand for iron ore. In order to reduce costs, steel mills lowered the use of high-grade concentrate, pellets and lump ore. Therefore, the pellet premiums continued to decline. In mid-to-early April, the production restriction for environmental protection in northern regions and falling coke prices provided supports for the rise in lump ore premiums. However, in late April, the intensive maintenance of steel mills in north-west and south-west China dragged the demand for lump ore to drop, hence the premiums of lump ore fell accordingly. In May, the maintenance of blast furnaces in steel mills will gradually reduce the demand for iron ore. And the demand for high-grade ore will remain weak as the profits of steel mills are unlikely to improve amid the terminal off-season. Therefore, the premiums of pellet and lump may continue to decline.