Brazil: Pellet exports up by 24%, y-o-y, in CY'21

Brazil registered a significant 24% increase in pellet exports at 19.69 million tonnes (mn t) in CY'21 compared to 15.93 mn t in CY'20, data maintained with SteelMint shows.

Notably, pellet exports, after hitting a high of 2.19 mn t in Aug'21, fell sharply to 1.3 mn t in Sept but again recovered in Nov-Dec'21. Export volumes in Dec'21 stood at 2.12 mn t, a marginal on month increase of 3% as against 2.05 mn t in Nov.

Notably, Vale's pellet output was recorded at 8.3 mn t in Q3CY'21 (Jul-Sept'21). Lower maintenance activities in Sao Luis, higher pellet feed availability from Itabira and lower pellet production in Vargem Grande may have resulted in lower pellet exports from Brazil in Sept'21 month.

China leading importer but volumes fall sharply

China continued to be the largest importer of pellets from Brazil at 2.43 mn t in CY'21. However, the volumes exported to China witnessed a considerable drop of 59% on year as against 6.01 mn t in CY'20.

China's pellet imports surged in CY'20 on strong demand as a result of the economic rebound since Mar-Apr'20, at a time when most other major economies around the world had been paralysed by the pandemic. Domestic pellet prices in China were higher compared to imported prices, resulting in increased purchases from the overseas suppliers. The situation, however, changed dramatically in 2021. Brazil's pellet exports took a hit as a result of rampant steel production curbs in China. Also, rapidly falling global iron ore prices lowered the spot seaborne iron ore lump premiums, making it (lump) more cost effective.

Japan occupied the second position among the top importers' list in CY'21 with 2.21 mn t followed by Egypt with 1.80 mn t. Brazil's pellet exports to Japan rose sharply by 84% y-o-y. Japan's higher crude steel output and recovery in demand resulted in increased pellet imports. As demand for steel products remained strong both in Japan and overseas, converter and electric furnace steel producers ramped up production by double digits.

Price trends

SteelMint's assessment of China's imported pellet (6-20mm, Fe 65%, Brazil origin) prices fell to $165/t CFR in end-Nov'21 from $195/t CFR levels in mid-Oct'21. Prices rose to $191/t CFR by end-Dec'21.

Outlook

Brazilian iron ore pellet producer Samarco Mineracao is eyeing full capacity production by 2030. The production is expected to reach 7.7 mn t, representing 26% of its capacity, as per recent reports. Considering this, Brazil's pellet exports are likely to remain on a higher side.