Atlantic contract iron ore pellet prices rose 5.8% in Q3

9 October 2017

Atlantic Basin iron ore pellet contract prices rose 5.8% in the third quarter, with a declining trend in invoices seen for Q2 short lived, according to analysis by S&P Global Platts.

Coking coal Premium Australia, US Q3 spot prices fall

Platts assessed estimated Atlantic monthly contract blast furnace pellet premiums at $44/dmt during Q3, down from $45/dmt in Q2. However, underlying iron ore fines prices crept up in Q3, pushing up invoices. September has seen a downward trend in China import fines, highlighting continued price volatility in the base reference.

Industry formulas using base fines prices and spot freight rates showed pellet invoices rose to $101.92/dry mt FOB Tubarao for Q3, from $96.35/dry mt for Q2, on an average netback Brazil basis, based on Platts calculations.

In Q1, calculated invoice-based pricing averaged $121.02/dmt, with monthly contract blast furnace pellet premiums at $45/dmt over January-March.

For DR-grade 67.5% Fe pellets, prices rose to $111.09/dmt FOB Tubarao basis in Q3, from $105.85/dmt in Q2 and $130.36/dmt in Q1, based on Platts calculations using industry formulas.

Higher-grade fines have seen increased demand and 65% Fe indices have strengthening at a greater pace in Q3 over Q2, pushing up costs and leading mills to consider using more lower iron content and higher impurity products at a greater perceived value.

Imports of iron ore from Australia to Europe, or expanding the range procured from Brazil, were discussed in the market.

Scrap prices, an industry reference for electric arc furnace-based complexes, saw benchmark Turkey import scrap prices surge over Q3. Prices hit $329.48/mt CFR Turkey, up from an average $273.38/mt in Q2 and $274.78/mt in Q1.

In Q3, met coal premium low-vol Platts spot prices averaged $188.78/mt FOB Australia, compared with $192/mt in Q2 and $167/mt FOB in Q1.

Benchmark coking coal prices derived by spot market index-based formulas were set at around $170/mt FOB, from Q2’s $194/mt FOB, and compared with a bilaterally agreed $285/mt FOB in Q1.

US coking coal spot prices weakened in Q3, with high-vols finding greater falls on greater supply in the sector for lower-quality material dragging on valuations as more buyers looked to switch and capture potential value.

In Q3, US low-vol averaged $171.24/mt, US high-vol A at $163.77/mt and US high-vol B at $137.46/mt, all on a FOB Hampton Roads Basis.

Source: Platts