EXCLUSIVE: Renegotiation of iron ore pellet premiums for Q4 sets stage for shorter-term pricing

The pellet segment of the seaborne iron ore market is starting to show signs of moving from annual contracts to shorter-term ones.

The recent drop in iron ore prices amid improvements in Brazilian and Australian supply and a weak global steel market have led to buyers renegotiating the premium they had agreed with Brazil’s Vale under annual contracts for pellet shipments to be made in the last three months of this year, Fastmarkets has learnt. These premiums are paid on top of an index for 65% Fe iron ore fines, such as Fastmarkets’ index for iron ore 65% Fe Brazil-origin fines, cfr Qingdao. This index averaged $99.17 per tonne in August, up 4.7% from $94.65 per tonne a year earlier, but 22.5% lower than $128.09 per tonne in July. At the time of writing, the index’s month-to-date average was $98.70 per tonne. In contrast, the index averaged just $89.65 per tonne in January, when a tailings dam breach at one of Vale’s mining operations sparked uncertainties over supply - Brazilian, and subsequently Australian - that...

Published

Deepali Sharma

September 13, 2019

11:48 GMT

Singapore