Miner Ferrexpo increased iron ore pellet sales to China and Southeast Asia in 2020 on stronger demand as the COVID-19 pandemic hit Europe, while it expects to sell more DR pellet and iron
ore concentrate product after initial shipments in 2020, the company said March 17.
The China and Southeast Asia region accounted for 56% of its iron ore sales in 2020, up from 30% in 2019, with China the biggest destination, followed by Austria, Germany, Turkey and Japan, the
company said in its annual report. China accounted for $909 million in iron ore revenues, based on total $1.65 billion iron ore sales in 2020.
“China saw increased pellet buying activity in 2020, which was the result of government stimulus and increased steel demand,” the Switzerland-headquartered company said. “With Chinese steel producers seeking to
increase the productivity of steel mills
and further reduce their environmental impact in 2020, owners of these steel mills increased buying of imported iron ore pellets from approximately 28 million mt of pellets in 2019 to 43 million mt in 2020,
representing a significant shift in the global pellet export market.”Ferrexpo said its operation in Ukraine “was well situated to adapt to this shift in the pellet market, whereas other pellet producers in
more remote locations such as Sweden and Canada faced additional shipping and logistics challenges with their increased shipping distances to China.”
The miner has expanded initial production of direct reduction (DR) pellets at 67% Fe with lower impurities, through existing production facilities. It shipped two trial DR pellet cargoes in 2020 and four trial
DR pellet cargoes are planned for 2021.Further growth for DR pellet is expected on green steel expansion plans by its customers.
Ferrexpo sold 183,000 mt of high grade concentrate in 2020, and said it expects to market additional concentrate for sale during 2021 with new investments completed, expanding processing capacity.
Traditional blast furnace pellet demand in Europe and some of the miner's Asian markets weakened through 2020 due to the COVID-19 pandemic, leading to lower Atlantic contract pellet premiums, Ferrexpo said.
Group average received DAP/FOB pellet prices fell by 4% during 2020 from a year earlier, as lower pellet premiums negated the impact of a 17% increase in average 65% Fe iron ore fines, and a $2/mt decrease in
benchmark freight rates. Ferrexpo continues to sell its pellets using 65% Fe fines index, it said,
Ferrexpo said it expects to further increase iron ore production in 2021 from 11.2 million mt in 2020, which was 6.7% up from 2019. The company shipped 12.1 million mt of pellets and concentrate, up 17% on
2019 sales, as demand expanded in China.
“Pellet production is likely to be higher in the second half of 2021 as pelletiser upgrade work is planned for the first half of the year,” it said.
This will deliver approximately 500,000-1 million mt/year of additional pelletizer capacity in the second half of 2021, it said.
Ferrexpo reported material reductions in 2020 to its carbon footprint for both Scope 1 (8%) and Scope 2 (21%) emissions on a unit basis, and expects a similar reduction in 2021. Group Scope 3
emissions in 2020 were 12.1 million mt of CO2, or 1,082 kg per ton of iron ore product produced, compared with 1,020 kg/t in 2019, using updated Scope 3 calculations. The conversion of iron ore products
into steel accounted for 94% of group Scope 3 emissions in 2020, compared with 92% in 2019, it added.
The Ukraine-focused group continues to utilize sunflower husks as a biofuel in pelletizing, as a substitute for natural gas. Sunflower husks usage has steadily increased to a 25% rate of energy used in the
pelletizer, after optimizing feed.
Disclaimer: this article is from the SBB STEEL MARKET DAILY, the copyright belongs to the original author, and only represents the original author's viewpoint. |
