Pellet demand to climb further As the steel industry's "flight...

Pellet demand to climb further

As the steel industry's "flight to quality" continues, Vale expects global pellet demand to reach 602mn t by 2025, up from 514mn t this year and a 33pc increase from 452mn t in 2014-17.
The company continues to increase the share of high quality ore in its portfolio and lift pellet output to take advantage of this demand growth.
In 2013, it had installed pellet production capacity of 44mn t/yr. The restart of its idled Tubarao plants has lifted the total by 14mn t/yr, while the recent restart of the Sao Luis plant brings back a further 8mn t/yr of capacity. In total, Vale expects to have pellet production capacity of 65mn t/yr in 2020.
Global concentrate shortage could double

But Poppinga delivered some stark warnings on the global shortage of iron ore concentrate, noting that it is relatively easy to build a pellet plant but difficult to secure enough of the right quality feedstock.
"The big question would be where will all this feed come from," he said, estimating a global shortage of 25mn t in 2018. "I wouldn't be surprised if this figure doubles in the next years," he added.
Vale itself benefits from the ability to generate pellet feed in the Southeastern System, where it aims to produce 2mn t/yr of high-grade, low alumina concentrate in 2020 before ramping up to 20mn t/yr in the long term.
The wider seaborne concentrate market is expected to become less tight with the imminent restart of Anglo American's Minas Rio project in Brazil, and some additional restarts such as Sweden's Kaunis in July and Tacora's Canada-based Scully mine in mid-2019. But the pace at which global pellet demand is growing means concerns over concentrate supply are expected to persist.