A bearish pall is emerging for the iron ore pellets market amid growing supply from Brazil and a shift in demand toward fines with the expected easing of sintering restrictions in China.
Improved demand for fines
Chinese steelmakers will likely increase their consumption of iron ore fines once the winter heating season in China ends. Sintering restrictions imposed at the start of the heating season to cut emissions will likely be eased then, according to market sources.
"Prices for iron ore fines have been firm on the back of strong demand from mills. This suggests that demand for pellets will start to be affected and likely cause their prices to fall," a trader in Singapore said.
Premiums for pellets have been on the decline, which is another indicator of a weakening demand for iron ore pellets.
Fastmarkets' iron ore implied pellet premium over 65% Fe Brazil-origin fines, cfr Qingdao is averaging at $26.96 per tonne so far in February, down...