The assessed pellet premium was normalized to typical specifications of 65% iron, 0.35% alumina, 5% silica, 0.02% phosphorus and 0.003% sulfur.
Physical properties specified by the assessment are 250 Cold Crushing Strength (CCS), and a maximum sizing of 2.5% under 5 mm.
Market participants said demand for pellet material was not strong among Chinese buyers who were becoming more particular about procuring higher quality raw material amid weak steel fundamentals.
"Imported pellet demand is really poor and we will not be buying imported pellet now as it is way too expensive," a steelmaker based in Anshan said.
"Pelletizing on our own is so much more affordable...Imported pellet is still too expensive for loss-making steelmakers to afford. We will go for cheaper feedstock now whenever it is possible. Even lump is cheaper than pellet now," the steelmaker said.
A procurement source for a Shandong-based mill said: "Pellet coming into China is not popular now [and it was getting] really too expensive for [them] to consider buying".
The source said he had purchased a circa 65%-Fe pellet cargo in late-September at a flat price of $73/dmt CFR China, but $70/dmt was the price to settle such a cargo at now as the spot market had softened.
Another trading source said he had yet to hear of circa 65%-Fe pellet premiums hit anywhere above the $20/dmt level yet, mainly due to Chinese steelmakers not being interested in maximizing blast furnace run rates while steel performance has remained lackluster.
"If you want higher efficiency for your blast furnace, you would go for pellet over lump or fines. But that is not the case for this current market, so most mills actually will chase the lower-grade stuff and they sure will not chase higher productivity," the source said.
A Hebei-based steelmaker said: "We are not making money as a mill so why would we want to buy high grade material like pellet?"
A Zhejiang-based trader said it was "difficult to induce buying interest" for imported pellet from Chinese buyers who were struggling to make ends meet.
Sintered fines were more popular among steelmakers, he said, as compared with the alternatives of lump or pellet material, leading many mills to increase the proportion of the former and decrease that of the latter in their blast furnace blends.
"It is difficult to even get buying interest [for pellet premiums] at the $18/dmt level," the said, adding demand for pellet cargoes was scarcer in the northern parts of China than in the south.
Chinese end-users in the north have greater access to domestic concentrate material and can more easily utilize them for pelletization.
