A source from a major slab producer in Brazil told SteelOrbis that their last acquisition of iron ore from Vale was closed at $44/tm for sinter feed fines, $62/mt for pellets and $52/mt for lumps, CFR, no taxes included.
The new prices represent reductions of 12 percent, 10 percent and 16 percent, respectively, from purchases made by the company two months ago, the source said, adding that further price reductions are expected, in line with the international prices of iron ore products.
Pellet prices are showing more resilience than the prices of fines and lumps, as a minimum tonnage of pellets is needed to optimize the charge in blast furnaces.
Furthermore, pellets have a captive market in most direct reduction plants, which require pellets to operate.
The Brazilian exports of pellets during the first half of the year were negotiated in average at $134/mt, while during the second half of the year the average price was $103/mt, a 23 percent reduction, while for iron ore, pellets excluded, the drop in prices from H1 to H2 was 33 percent, from $83/mt to $55/mt.
In Brazil, pellets are produced by Vale and by Samarco, a JV between Vale and BHP Billiton, while CSN has plans, currently on hold, to build a pellet plant.