Atlantic Basin iron ore pellet contract prices fell in the fourth quarter of 2017 on lower fines prices, especially for buyers utilizing spot freight references, while other raw materials prices strengthened over December, according to an analysis by S&P Global Platts.
Industry formulas using base iron ore fines prices and spot freight rates showed pellet invoices fell to $94.66/dry mt FOB Tubarao in the quarter, from $101.92/dmt in the previous quarter. This also compared with $96.35/dmt in the second quarter, all on an average netback Brazil basis, according to Platts calculations. In Q1 2017, calculated invoice-based pricing averaged $121.02/dmt.
Platts assessed estimated Atlantic monthly contract blast furnace pellet premiums at $45.50/dmt in the fourth quarter, up from $44/dmt in the third. This was thanks to a tight market and strong demand for pellets, leading to higher priced premiums for quarterly business. The trend was in line with the upper end of premium values heard referenced in earlier annual contract business.
However, underlying iron ore fines prices netback to Brazil fell in the fourth quarter, aided by an increase in spot freight rates between Brazil and China from levels seen in the third quarter.
Industry-agreed fixed freight rates used to netback fines prices from China to Brazil for FOB sales may have remained far lower than spot rates, reducing the benefit in netback pricing for buyers agreeing to such terms over the quarter compared with spot freight.
For DR-grade 67.5% Fe pellets, prices fell to $104.83/dmt FOB Tubarao in the fourth quarter, from $111.09/dmt FOB in the third. The reference, based on spot freight rates to calculate fines netbacks, averaged $105.85/dmt in the second quarter and $130.36/dmt in the first, based on Platts calculations.
While pellets and higher-grade fines continue to see demand, the relative performance of 65% Fe indexes over the 62% Fe reference weakened in the fourth quarter from the previous quarter. This was thanks to overall prices falling earlier in the quarter and China cutting some demand as some steel plants shut to cut pollution levels over winter.
Ferrous scrap prices, an industry reference for electric arc furnace-based complexes and a raw material for integrated steelmaking plants, benchmark Turkey import prices surges in the third quarter and remained high in the fourth. December is looking to average over $355/mt CFR Turkey, after prices surged this month from October and November levels.
Scrap prices in the third quarter hit an average $329.48/mt CFR Turkey, up from an average $273.38/mt in the second quarter and $274.78/mt in the first.
Met coal premium low-vol Platts spot prices averaged $204.67/mt FOB Australia in the fourth quarter, from $188.78/mt FOB in the third, and from $192/mt in the second quarter and $167/mt FOB in the first.
Benchmark coking coal prices derived by spot market index-based formulas were set at around $192/mt in the fourth quarter, up from $170/mt FOB in the third. In the second quarter, settlements were first reached using spot market index calculations at around $194/mt FOB, down from a bilateral industry negotiated settlement of $285/mt FOB in the first quarter.
Source: PlattsPrevious Next
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