More Pellet Feeds being Melted in Chinese Blast Furnaces

The ratio of pellet feeds in blast furnaces among the 64 sampled steelmakers across China rose 0.16 percentage point on fortnight and by 2.17 percentage point on year to 15.79% as of May 20, Mysteel's latest bi-weekly survey showed. Though the ratio was slightly off from the recent peak of 15.84% recorded last month on April 8, these days Chinese mills nonetheless are increasing their use of domestic pellet as prices are acceptable and supplies of domestic iron ore concentrates tight, market sources said on Friday.

Over May 7-20, the ratios of sintered fines and lumps in blast furnaces at the canvassed mills reached 72.84% and 11.37% respectively, the former being lower by 0.48 percentage point compared with the prior two weeks, and the latter up by 0.33 percentage point, according to the bi-weekly study.

"Concentrate supplies from domestic miners and beneficiation plants remain tight, even though production of both has steadily increased," a Shanghai-based market insider said. "This led those mills with high demand for concentrates - particularly those in North China - to have a look at domestic pellets as the prices have become more attractive," he noted.

Another market source in Tangshan, North China's Hebei province, confirmed that most mills there are stepping up their use of domestic pellet, while an official with a Chengde-based pelletizing plant in Hebei also disclosed his firm's sales of pellets had increased since the beginning of May.

An official with a Shandong-based pelletizing plant in East China explained that prices being charged by rival pellet makers in North China's Shanxi and Hebei provinces are cheaper than his because his plant's costs for making pellet are higher - though so too is the quality. "Because of this, our pellet stocks have accumulated slightly, and domestic mills are more likely to buy cheaper imported pellet instead," he admitted.

As of May 20, prices of 62% grade pellet in Tangshan's Qian'an city reached Yuan 985/dmt ($138.4/dmt), up by 1.5% on a fortnight and 3.1% on month, while 63% pellet in Shandong's Yishui is fetching Yuan 1,050/dmt at the same time, unchanged over the two weeks but down by 1.9% on month, Mysteel's database showed. The two prices are EXW and include 13% VAT.

To help reduce their steelmaking costs and to keep their steel production smooth, since March Chinese steelmakers with their own pelletizing machines have preferred to consume domestic concentrates to make their own pellets, as reported.

Besides, with imported iron ore becoming more expensive, increasingly most mills are seeking the more cost-effective domestic concentrates for sintering and pelletizing, which is serving to crimp the availability of domestic concentrates.

This article has been published under an article exchange agreement between Mysteel Global and SteelMint.