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Insight 22 February 2017

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Report summary

Seaborne trade in pellet feed is a small but relatively fast growing segment of the iron ore market. Vale is the world's largest supplier of seaborne pellet feed but over the next five years its dominance will be challenged by Anglo American's Minas Rio and CITIC's Sino Iron. Seaborne pellet feed will have to be priced competitively in order to displace other forms of iron units in the consumption mix. We estimate that a $5/t premium over 65% Fe fines is appropriate over the medium term.

Seaborne supply - a potential growth sub-set of the iron ore market
Chinese demand – the worst is over for pellet feed
Middle East – struggling to realise demand potential
Vale
CSN
Anglo American (Minas Rio)
CMP
CITIC (Sino Iron)
Ansteel (Karara Mining)
Russian and Ukrainian suppliers
How is it priced?
Price outlook

Tables and charts

This report includes 10 images and tables including:

Chart 1: global exports of iron ore (tonnes)
Chart 2: global exports of iron ore (share)
Chart 3: pellet feed exports by country

Chart 4: pellet feed exports by company
Destination of Minas Rio material for the life of mine. Source: Reuters trade flow
Does the iron ore market feel the need - the need for pellet feed?: Table 1
Chart 5: Pellet feed export cash cost curve 2016 (FOB)
Chart 6: Iron ore export cash cost curve with pellet feed producers highlighted 2016 (FOB)
Chart 7: Minas Rio quarterly realised price vs 65% Fe sinter fines index
Chart 8: Average delivered 65% Fe pellet price (ex-VAT) in Anhui province vs 65% CFR sinter fines index