London — Atlantic Basin iron ore pellet contract prices fell in the fourth quarterof 2017 on lower fines prices, especially for buyers utilizing spot freightreferences, while other raw materials prices strengthened over December,according to an analysis by S&P Global Platts.
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Industry formulas using base iron ore fines prices and spot freight ratesshowed 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 thesecond quarter, all on an average netback Brazil basis, according to Plattscalculations. In Q1 2017, calculated invoice-based pricing averaged$121.02/dmt.
Platts assessed estimated Atlantic monthly contract blast furnace pelletpremiums 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 tohigher priced premiums for quarterly business. The trend was in line with theupper end of premium values heard referenced in earlier annual contractbusiness.
However, underlying iron ore fines prices netback to Brazil fell in thefourth quarter, aided by an increase in spot freight rates between Brazil andChina from levels seen in the third quarter.
Industry-agreed fixed freight rates used to netback fines prices fromChina 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 overthe quarter compared with spot freight.
For DR-grade 67.5% Fe pellets, prices fell to $104.83/dmt FOB Tubarao inthe fourth quarter, from $111.09/dmt FOB in the third. The reference, based onspot freight rates to calculate fines netbacks, averaged $105.85/dmt in thesecond quarter and $130.36/dmt in the first, based on Platts calculations.
While pellets and higher-grade fines continue to see demand, the relativeperformance of 65% Fe indexes over the 62% Fe reference weakened in the fourthquarter from the previous quarter. This was thanks to overall prices fallingearlier in the quarter and China cutting some demand as some steel plants shutto cut pollution levels over winter.
Ferrous scrap prices, an industry reference for electric arcfurnace-based complexes and a raw material for integrated steelmaking plants,benchmark Turkey import prices surges in the third quarter and remained highin the fourth. December is looking to average over $355/mt CFR Turkey, afterprices 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 thefirst.
Met coal premium low-vol Platts spot prices averaged $204.67/mt FOBAustralia 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 formulaswere set at around $192/mt in the fourth quarter, up from $170/mt FOB in thethird. In the second quarter, settlements were first reached using spot marketindex calculations at around $194/mt FOB, down from a bilateral industrynegotiated settlement of $285/mt FOB in the first quarter.
--Hector Forster, email@example.com
--Edited by Jonathan Fox, firstname.lastname@example.org