Premiums for iron ore pellets - the highest-quality steelmaking raw material - have sunk this month despite the loss of a fifth of global supplies after a Brazil mine disaster, underscoring the industry's deep glut.
Even a permanent closure at the flood-hit Samarco mine would be unlikely to boost pellet premiums, analysts and traders said, with other miners able to boost supply and Chinese steel mills eager to cut costs by using cheaper ore.
"It's probably the least sensitive time for a supply issue," said Mark Pervan, global head of commodity research at ANZ.
Iron ore prices .IO62-CNI=SI have tumbled nearly 40 percent this year, hitting a decade low at $43.40 a tonne on Tuesday on oversupply and falling Chinese steel demand.
The premium that steel mills pay for pellets has also been falling, and has continued to slide since a tailings dam owned by Samarco burst on Nov. 5, unleashing 40 million cubic meters of mud on the valley below and killing 11 people with 12 still missing.
Samarco, jointly owned by BHP Billiton and Vale SA, produces between 25-30 million tonnes a year of iron ore, mainly pellets, selling to China, Europe, the Middle East and Japan.
The premium for iron ore pellet for delivery to China fell to $12.25 per dry metric tonne as of Nov. 18, continuing a steep decline from early October when it stood at $19.30, according to pricing agency Platts.
Read more at Reutershttp://www.reuters.com/article/2015/11/25/ironore-pellets-idUSL3N1312BL20151125#Mfw4OtM3bQdtlUP2.99
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